It’s been the third month in a row how car sales continued to rise in China, giving hope to the economy and stock market. Everyone is desperately trying to pick themselves up from the fall that happened due to the coronavirus that initially started in Wuhan, China.
Sales of cars, even commercial ones, next to sedans and SUVs, increased 11% in June from a year earlier to 2.28 million car sales. What the China Association said is that from the last month, the sale multiplied by about 4%.
Customers in the world’s largest car market are slowly returning to reappear, even though the trade tension between China and the U.S. still exists. When the government eased up the strict measures, there was hope again for this market field. The government had an excellent trick up their sleeve – they offered massive discounts so they can slow down the economic setback.
Carmakers expanding business in China
As you might have heard, Tesla inc. Expanded their manufacture to China, and they also had a goal for a while to build underground tunnels there first. Then in the U.S., This means giving billions of dollars to expand their business and have a broader customer reach since China relies a lot on technology, from money to cars (their WeChat app usually pays everything, and they almost don’t deal with cash). Tesla Inc., General Motors Co., and Volkswagen AG are determined to start with electric car sales in China, and even the recession doesn’t seem to phase them too much. Statistically speaking, at this moment, trucks have benefited the most from the economic uprise, which also means more work for delivery companies. These days, passenger cars started as well, so there might be hope for recovering that part of the car industry.
What Tesla does in China
Tesla Inc. reported a sequential gain in four-month deliveries, which seemed impossible the only couple of weeks ago. Its stock surged in the past week toward Wall Street’s most bullish price target.
Elon Musk succeeded in selling 90,650 cars to customers in the three months by June, surpassing analysts’ estimates for about 83,000. What is even more fascinating is that Tesla delivered about 88,400 vehicles in the first quarter, already breaking the record.
Stocks and numbers
Tesla shares rose as much as 9.7% soon after the opening of regular trading, nearing the $1,250 target set Thursday by Wedbush Securities. The stock is very close to tripling this year, which proves further the technology uproar (even if those are cars) in the time of crisis.
Elon Musk overcame an almost two-month shutdown of Tesla’s California car plant by working more at its new factory near Shanghai. Localizing production in China helped reach more customers in the world’s largest electric vehicle market by giving discounts. The time also was the first quarter of sale (when they sold the most) for the Model Y. Musk has predicted this model would become Tesla’s top seller. The next big “what if” for Musk is whether the sales were enough to earn enough, so they don’t feel the setback. He even told the employees at the beginning of this week that avoiding a loss was possible. By the end of the quarter, Tesla CEO sent emails of support to employees and to reassure investors that everything is going in the right direction, but last time he didn’t hit the mark they set for their sales, and everything plunged for a while.
What could happen
This time, if Elon Musk succeeds in hitting the mark, Tesla could finally qualify to be a part of the S&P 500 Index (you probably thought it was already there, right?). It also sells emissions credits to other automakers, making their stocks worth investing, because no matter how impulsive their CEO looks like, he didn’t get where he is because of his brash decisions. He knows what he’s doing and has faith in himself and the company he’s built for so long.