Tesla (TSLA) stock surged on Friday after the automaker reported strong sales in China.
Tesla’s February wholesale shipments from its Chinese factory rose 32% from a year ago to 74,402 vehicles, according to the China Passenger Car Association (CPCA). This figure also represents a 13% month-over-month jump from January.
Shares of the electric vehicle maker rose nearly 3.6% on Friday.
The increase in deliveries in February is not surprising given that CPCA said that new energy vehicle sales in February, which include sales of battery electric and hybrid vehicles, increased by 30% in the region. ‘together. And he noted last month that January would be a “weak” month for overall sales in the region due to the Chinese New Year.
Still, Tesla’s February sales increase is a positive development as competition intensifies in the important Chinese electric vehicle market, where Tesla makes a growing share of its global sales.
“Tesla’s continued growth in China should come as no surprise,” said Chandan Kumar, chief product officer at index provider Indxx. “As a logical consequence of this Tesla, despite what many Americans may think, it only gets about 31% of its total sales from the United States, with the rest coming mostly from China and Europe.”
The recent price cuts in January of the Chinese-made Model 3 and Model Y – which were reduced by 13.5% and 10%, respectively – clearly give Tesla a boost in the region, despite competitors like BYD which overtook them in February. BYD’s new energy vehicle sales jumped more than 100% to 193,655. Meanwhile, Tesla’s share of China’s new energy market fell from 10% to 9% while BYD went from 27% to 37%, according to the CPCA.
Tom Zhu, Tesla’s head of global manufacturing (and likely heir to CEO Elon Musk), raised concerns about demand in China earlier this week at Tesla’s Investor Day.
“As long as you offer a valuable product at an affordable price, you don’t have to worry about demand,” Zhu said during the Q&A portion of the event late Wednesday night. Zhu noted that the price cuts in China “have generated huge demand, more than we can produce, really.” Tesla has also cut prices in Australia, Japan and South Korea to stimulate demand.
The price cuts were of course applauded by new Tesla buyers in China, but sparked deep resentment and protests from recent buyers who did not receive refunds or other forms of compensation, such as than free recharge, when the price reductions were announced.
According to the Tesla China website, the current wait time for all versions of the built-to-order Model 3 is one to four weeks, and the wait time for the Model Y SUV (RWD and dual motor) is two to five weeks.
—
Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on instagram.
Click here for the latest stock market news and in-depth analysis, including events moving stocks
Read the latest financial and business news from Yahoo Finance