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Tesla Starts Delivering China-Made Model Y Crossover

Elon Musk expands his product offering.
(CanadianPhotographer56)
(CanadianPhotographer56)
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“Tesla Inc. delivered its first made-in-China Model Y compact crossover vehicles on Monday, the latest milestone in the American company’s drive into the world’s largest market for electric cars,” WSJ writes.

Why It Matters: The Model Y is the second vehicle Tesla is producing at its Shanghai factor. It began construction on the facility two years ago and revved up capacity and production to offset losses in the pandemic. As China continues to double-down on electric vehicles — the government set a target for EV sales to be 20% of auto sales by 2025 — any further success overseas represents a big piece of Tesla’s overall growth potential.

Numbers To Consider:

  1. The Model 3 sold 138,000 units in China last year and was the best-selling EV in the country.
  2. In total, 1.11 million EVs were sold in China last year, according to the China Passenger Car Association.
  3. The Chinese version of the Model Y costs between $52,000 and $58,000.

The Big Picture: Tesla delivered nearly 500,000 cars worldwide last year. “As Model Y production ramps up, China would account for more than 40% of Tesla’s global deliveries by 2022, according to a Jan. 14 research report by Wedbush Securities Inc. Wedbush analysts also forecast that Tesla would deliver more than 1 million vehicles next year.”

  • The Shanghai plant currently can produce 250,000 cars a year but will expand to double that.

The Bottom Line: Tesla plans to report fourth-quarter earnings next week. Wall Street expects the company to achieve a full-year profit for the first time.

Justin Oh:

Tesla ($TSLA) is already seeing amazing momentum in China, which will undoubtedly be a massive market for electric vehicles. If you’re dead set on investing in the growth of electric vehicles, my pick is still Tesla over the unproven competitors like Lucid ($CCIV), Fisker ($FSR), and Nio ($NIO). 

Tesla provides a great mix of proven profitability, battery leadership, autonomous driving leadership, U.S. EV dominance, exposure to EV growth in China, and the potential to innovate power storage.

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