When Elon Musk started slashing the prices of Tesla vehicles, some observers took it as a sign of weakness. It was anything but.
Price cuts help Tesla’s (ticker: TSLA) sales and increase its market share in Europe and elsewhere.
New data shows the electric vehicle maker’s sales in Europe grew faster than any other automaker in February. Registrations of Tesla vehicles in the European Union, which reflect sales figures, rose to 19,249 this February from 12,860 in the same month last year, according to the European Automobile Manufacturers’ Association.
Tesla registrations accounted for 2.4% of the total car market in the EU last month, up from 1.8% a year earlier. Total EU passenger car registrations increased by about 12% year-on-year to about 803,000 units, while battery electric vehicle (BEV) registrations increased by 40% to about 97,000 units and accounted for about 12% of total sales.
In February, Tesla registrations accounted for about 20% of battery electric vehicle registrations in Europe, up about two percentage points year over year.
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In recent months, BEV sales accounted for around 20% of all new vehicle sales in China and almost 6% of all new vehicle sales in the US in 2022.
In the first two months of 2023, Tesla’s market share in BEV sales also increased in China, according to data from the China Passenger Car Association. This monthly data includes Chinese-made and exported vehicles.
Monthly data from each country may fluctuate due to a number of factors. Taken together, however, the various data show that Tesla’s price cuts are having a positive impact on its market share.
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“EV price cuts are not a fad, they’re a trend,” Morgan Stanley analyst Adam Jonas wrote in a report Monday. Lower battery costs, lower lithium prices and more efficient manufacturing are leading to a “deflationary trend” in electric vehicles, the analyst adds.
He believes that Tesla is the industry’s cost leader and will continue to be the pricing leader. Jonas recommends buying shares and has a price target of $220 on the stock.
Tesla’s nearly 50% growth outstripped that of rivals like Volkswagen (VOW.Germany), which grew registrations by 18%. This number includes all VW sales. The German carmaker is also aiming for growth in the market for electric vehicles.
Tesla shares are up 6.9% to $195.88 in recent trade. Market share helps, but auto stocks trade a little like bank stocks these days. Cars are bought on credit, so the health of the banking sector is important.
First Republic Bank (FRC) is up 56% and SPDR S&P Regional Banking ETF (KRE) is up 6.5%. The S&P 500 and
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The Nasdaq Composite is up 0.8% and 1.1% respectively.
At Tuesday’s start of trading, Tesla stock was up about 49% so far in 2023.
Write to Adam Clark at [email protected]