Tesla has seen a surge in its stock price despite facing new European tariffs on Chinese-made electric vehicles (EVs). While these tariffs are designed to hinder the competitiveness of Chinese EVs in the European market, Tesla has managed to secure a favorable tariff rate due to its significant investments in China.
The Impact of European Tariffs
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Create account Try a demo Download mobile app Download mobile appThe European Union's decision to impose tariffs on Chinese EVs is a direct response to concerns about unfair trade practices and government subsidies. These tariffs aim to protect European automakers and level the playing field for domestic EV manufacturers. However, the tariffs have had varying impacts on different brands. It is also important to stress that these tariffs are in addition to the standard 10% import duty on cars. Key points regarding the tariffs:
- The tariffs range from 7.8% to 35.3% depending on factors such as cooperation with the anti-subsidy investigation and joint venture arrangements with European companies.
- The tariffs are expected to lead to price increases for Chinese-made EVs in Europe, potentially making them less attractive to consumers.
- Some Chinese brands, particularly those with higher tariffs, may face challenges in maintaining competitiveness and could see reduced market share.
Tesla's Advantage
Tesla, with its significant manufacturing operations in China, has benefited from a lower tariff rate of 7.8%. This favorable treatment is a result of negotiations and considerations related to the company's investments and contributions to the Chinese economy and also its investments in Europe, especially in Germany.
Tesla deliveries are rising
In addition to the tariff advantage, other factors have contributed to Tesla's recent stock gains:
- Strong delivery numbers: Tesla's third-quarter delivery results, which met market expectations, boosted investor confidence. The EV maker delivered close to 463k units in Q3 which was higher than in Q2 and year ago. It was in line with market expectations but below than whisper numbers of 465k-470
Deliveries increased in Q3 in comparison to Q2 and year ago numbers. Source: Bloomberg Finance LP
- Anticipation for Robotaxi Day: The upcoming event focused on Tesla's self-driving technology and robotaxi plans has generated excitement and potential for future growth.
- Recall announcement: While the recall of Cybertruck vehicles was a minor setback, it did not significantly impact the stock price. It is also important to note that Tesla is taking orders for cheaper version of Non-Foundation Series Cybertruck.
Tesla financial report for Q3 is scheduled on October 23. Expectations are not so high so looking at deliveries number, there is a chance for positive surprise and the stock price may be considered cheap looking from short term perspective, comparing to S&P 500. Source: Bloomberg FInance LP
The price is up more than 2% today following a 3-day sell-off. The price remains in a wide consolidation between 160 and 280. If recent developments continue to support company performance, there is a possibility of breaking the recent high from July and reaching the highest level since September 2023. Source: xStation5.
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