China’s auto industry will be a thriving market for Tesla’s electric car. Tesla’s China sales shot up to $1.07 billion from $319 million in 2015, as stated by an SEC 10K filing.
Analyst Alexander Potter mentioned in a note to clients on Tuesday, “China could eventually be Tesla’s biggest source of revenue. If Tesla sidesteps obstacles by making electric vehicles locally, the company may be well positioned to build its recent successes.”
The company decided to delay investment, but post the confirmation of joint venture-related policy, investors will expect Tesla to announce its China strategy in a relatively short order.
Forecasters at Wall Street said, Tesla targeted a price of $386 per share, representing 12 percent upside on September 26.
China may be willing to adjust its rules which will allow the international companies to partner with local firms to manufacture vehicles in the country.
The Asian country is gradually considering relaxing regulations for international collaboration, the Wall Street Journal stated this week.
Close to 24.3 million vehicles were sold in China last year as compared to 12 million cars sold in the U.S.
Authorities envision that major Chinese companies are emerging to dominate the global EV market. The Chinese EVs are not impressive in terms of quality as compared to Tesla’s products.
Tesla’s rivals are not at par with American automaker. It will take years for the competitors to manufacture a locally-built luxury electric vehicle akin to Tesla’s EVs.
Toni Sacconaghi, an analyst from Alliance Bernstein, a research company in New York, cautioned the investors from purchasing Tesla’s current shares. The Model 3 from Tesla is at a production risk.
Tesla’s stock is up 62 percent this year. The company’s stock dipped to by 0.7 percent in midday on September 20.
Despite the stock dip, forecasters are optimistic about the demand for luxury vehicles in China, which will rise for years.