Tesla stock jumps 10% in 4 days, what is driving the rally?
Strong electric vehicle sales in China could be the reason for the rally in the shares of Tesla, as it demonstrates continued demand for the EV sector
August 03, 2021 / 09:41 AM IST
Shares of electric carmaker Tesla continued their winning streak for the fourth consecutive session, rising over 3 percent on August 2. With this, the stock has rallied 10 percent since July 28.
According to media reports, strong electric vehicle sales in China could be the reason for the rally in shares of the carmaker as it demonstrates continued demand for the EV sector.
Chinese smart electric vehicle manufacturer NIO Inc said it delivered 7,931 vehicles in July, representing a year-over-year (YoY) growth of 125 percent. Other manufacturers such as Li Auto and XPeng also reported over 200 percent YoY jump in July sales.
This is despite Beijing's efforts to tame tech companies, which caused a sell-off in Chinese and Hong Kong stocks in the previous week.
The strong showing from the Chinese EV manufacturers bodes well for Elon Musk's company as the region has become more and more important for Tesla over the last few quarters.
The Palo Alto-based company made $3 billion in sales in China during the first quarter of 2021, accounting for 29 percent of global sales for the period. That’s up from 21 percent for all of 2020.
Moreover, the country has also become an important manufacturing hub for the company. Its Gigafactory in Shanghai produced 45 percent of Tesla's total production for the three months ended June 30. The Shanghai factory produces Models Y and 3 for the Asia-Pacific market. While it's still under construction, the factory has the capacity to build nearly 500,000 vehicles annually.