BYDDF - Why did Tesla stock go up today? It's not China

2023-08-21 16:36:31 ET

Tesla ( NASDAQ: TSLA ) finally broke its month-long malaise to close up more than 7% on Monday afternoon.

Shares have dropped more than 11% over the past month since the automaker reported quarterly earnings and head honcho Elon Musk said he’d be willing to keep dropping prices if necessary to stay competitive.

Earlier this month, data from the China Passenger Car Association indicated the electric vehicle maker sold 64,285 China-made electric vehicles during the month of July, down 31% from June and the lowest for 2023.

By comparison, BYD Company Limited ( OTCPK:BYDDF ) reported a 61% year-on-year rise in July sales to 261,105 passenger vehicles, including 18,169 that were exported. During the month of July, Nio ( NIO ) reported deliveries of 20,462 (+91% month-over-month), Li Auto ( LI ) reported deliveries of 34,134 (+5% M/M), and XPeng ( XPEV ) reported deliveries of 11,008 (+28% M/M).

Meanwhile, BofA noted that China deliveries that dropped 31% in July from June “potentially indicates that the price cuts TSLA implemented in late 2022 may have pulled forward demand rather than driving incremental volumes.”

China doesn’t appear to be improving, either with the central bank cutting a key interest rate for the second time in three months this week.

Price cuts, margins

Meanwhile, Baird said price cuts and their impact on margins will drive the narrative for the electric-vehicle maker in the second half.

“Potential upcoming catalysts for the stock include Cybertruck launch, a wider-scale adoption of [Full Self Driving, Tesla’s suite of advanced driver assistance systems to navigate city streets], continued growth in the energy business, expanding into new markets, and a possible AI Day, among others,” the analyst wrote in a note to clients about Tesla and other companies.

This month, TSLA also lost its long-time chief financial officer with the exit of Zachary Kirkhorn after 13 years.

Shares are up 114% year-to-date.

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