Today was a good day for Tesla investors, as the Tesla stock prices rose by 5.93%. But what caused this sudden surge in the stock price?
Tesla Inc. is one of the world’s most valuable companies and is well-known for its electric car business. The company has achieved many milestones over the years both in terms of its products and its bottom line. Despite all that, there were still some people who doubted Tesla’s future potential earlier in 2020.
Today, however, those doubts have been put to rest as the stock prices rose significantly across multiple markets. This article will explore the main drivers behind this surprise jump in share prices and whether it could be sustained going forward or not.
Tesla owners in China are demonstrating against the lowered prices since the wait times for delivery are getting longer due to the heightened demand.
It should be taken into consideration that the estimated delivery dates for the two editions of the Model Y have increased as Tesla has made arrangements for an interruption in the production at its Giga Shanghai plant due to the Chinese New Year. The firm has arranged that the manufacturing process will be put on pause starting from January 20th up until January 31st.
Shares of Tesla (TSLA) are on the rise even though the most important marketplace, China, has a mixed set of news. Over the weekend, reports have surfaced of protests at Tesla showrooms due to the company’s move to reduce its prices on Friday. This was the second price drop in the past three months, meant to increase sales in the competitive Chinese market. As per Reuters, the same price cuts were also implemented in Australia, Japan, and South Korea. Recent buyers of Tesla were asking for rebates and credits for purchases done prior to the announcement of the price cuts.
The Chinese-made Model 3 had a reduction of 13.5%, with a starting price of $33,515, whereas the Model Y had a 10% decrease, starting at $37,899. Many of these owners had bought the cars in order to benefit from the expiring government subsidies for EVs, feeling that they overpaid for the vehicles. Videos of the protests took place in Shanghai, Beijing, and Chengdu, with people shouting “Return the money, refund our cars”.
A Tesla China spokesperson told Reuters that the company will not be providing any relief to the new buyers who had taken delivery before the price cut. Along with the protests, the price cuts also showed an increase in new demand for the vehicles. The delivery waiting time for the rear-wheel drive and long-range versions of the Model Y have been pushed to two to five weeks. Nevertheless, the wait time for the Model 3 and Model Y performance edition remain at one to four weeks. To note, these extended wait times come as Tesla plans to halt production from January 20th to 31st for the Chinese New Year.