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Graphic shows Tesla’s rise in market capitalization over the past 12 months.


Tesla soars on Chinese demand

By Duncan Mil

June 11, 2020 - Tesla shares have rocketed past the milestone of $1,000, and its market capitalization has ballooned to more than $190 billion, driven by demand for its Model 3 electric car in China.

Tesla’s shares closed at $1,025.05 on Wednesday. A rally of around 14% in Tesla shares could see it claim Toyota’s crown as the world’s most valuable carmaker, despite a massive production gap between the two automakers. California-based Tesla produced 103,000 vehicles in the first quarter of 2020, or just four per cent of almost 2.4 million units made by Toyota.

Tesla became the world’s second-most valuable automaker in January when it surpassed Volkswagen. It’s now worth 223 per cent more than its German rival.

Tesla’s stronger-than-expected Model 3 demand in China is a “ray of shining light” for Tesla during a “dark global macro” environment, Los Angeles-based Wedbush Securities analyst Daniel Ives wrote in a note.

The first quarter of 2020 was Tesla’s first full quarter of production at its Gigafactory Shanghai, where it produces Model 3 vehicles for the Chinese market. In May, Tesla’s Chinese Model 3 sales jumped to a record high of 11,095 units -- June deliveries might be even more significant.

Tesla only started delivering its new Long Range rear-wheel-drive Model 3 made at Gigafactory Shanghai toward the end of the month. The company looks to be on track to achieve 100,000 Model 3 units in its first year, and the Chinese growth story is worth at least $300 per share to Tesla’s stock.

Back in the U.S., Tesla’s Fremont California factory has been closed for the first half of the second quarter, due to the coronavirus pandemic. Tesla is going to heavily rely on its Chinese sales to mitigate the impact of the virus on its Q2 2020 financial results.

PUBLISHED: 11/06/2020; STORY: Graphic News