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Elon Musk was able to work his magic during Tesla's Q1 2024 earnings call, giving the bulls enough ammunition to pull up the beaten-down stock from its 1-year nadir. However, the recent recovery in Tesla shares is likely to be ephemeral if the EV giant is not able to revive the margin-critical demand for its vehicles in China.
$TSLA
NEWS: Tesla China sells 62,167 vehicles in Apr.- 2023 (Jan~Apr) : 305,164
- 2024 (Jan~Apr) : 283,043 pic.twitter.com/4MsIQ7qdAo— Tsla Chan (@Tslachan) May 7, 2024
Today, China's CPCA disclosed that Tesla's insured units for April - a close approximation for the monthly delivery number - were recorded at 62,167 units, continuing the prevailing trend of year-over-year declines.
What's more, Tesla recorded a relatively muted insured units number for April despite offering zero-percent financing promos and material discounts, with new government incentives for EVs in China continuing to act as potent tailwinds for the wider industry.
Critically, Giga Shanghai is now operating with a spare capacity of around 30 percent, based on the facility's widely reported annual production capacity of 1.1 million units. As per the company's latest Form 10-Q, China accounted for around one-fifth (21.56 percent) of Tesla's total revenue in Q1 2024. Given the fact that the vast majority of Tesla's net income in 2023 was sourced from Giga Shanghai and Giga Berlin, this spare capacity is expected to materially dent the EV giant's profitability.
The information request marks the latest escalation of NHTSA’s examination of Autopilot dating back to August 2021, when the agency opened a defect investigation precipitated by Teslas crashing into first-responder vehicles. In the process of closing that probe and… https://t.co/UjSO4D4ih8
— MWM (@MWM76) May 7, 2024
Meanwhile, the NHTSA has now given a 01st of July ultimatum to Tesla to provide additional information regarding its December 2023 Autopilot-related recall. Specifically, the NHTSA wants a comparison of how many times drivers have been prompted to place their hands on the steering wheel pre- and post-recall. This information is intended to help the NHTSA in determining whether the Autopilot played any role in the 20 crashes involving a Tesla vehicle since the December recall.
Tesla shares are down over 3 percent at the time of writing as investors digest today's less-than-stellar numbers out of China. Year to date, the stock is down over 27 percent.
