News Of Tesla Factory Opening In China Results In Share Price Rise. Since its founding in 2003, Tesla has been committed to pushing the boundaries of technology and providing new innovative services to its customers. CEO Elon Musk can be found at the heart of these exciting new plans, including the company’s most recent announcement to open a large new plant in China. The aim of this new venture is to ensure the manufacturing of 500,000 new vehicles every year as demand increases for Tesla’s products.
The news of this new plant comes as no surprise with reports showing the Chinese market as the fastest growing electric goods market in the world. Tesla’s sales figures have increased from 4,500 in 2015 to 15,000 in 2017. This strong growth rate has highlighted the potential for further gains in the Chinese and Asian markets. In addition to the car manufacturing process, Tesla has announced they will also produce their batteries here too. Tesla expects the new plant to be ready for vehicle manufacturing within two years, having first to sign off on planning laws and regulation.
The result of this news was a rise in Tesla shares by 1.7 percent, further strengthening the company’s position as one of the fastest growing manufacturers in the global car market. Research conducted by Macquarie bank show sales of electric vehicles in China growing strongly year on year at a rate of 72%. One of the key reasons for this continued growth is the Chinese governments maintaining a purchase tax exemption for Electric Vehicles. Tesla has been capitalising on these incentives as consumers are now switching from traditional petrol and diesel cars, to their Electric counterparts.Advertisement
Another key factor that has resulted in this news can be seen in Tesla’s newly launched Model 3, a low-cost model aimed at attracting more consumers to the Tesla brand. Reports have stated that the Model 3 already has in excess of 400,000 pre-orders, confirming the potential of a low-cost electric vehicle in today’s market. Tesla dominated the electric car sales in Canada for the month of June. Reports showed the model 3, model X and model S all performing strongly.
The Model 3 has been seen as a key success factor in the rise of Tesla’s share price. Has the company looks to continue benefiting from the growth in China, the new plant in Shanghai will facilitate this. The Model 3 has significantly lower production costs, including using a cheaper electric motor, in comparison to the more expensive materials in the model S. Many analysts are forecasting a strong 3rd quarter for Tesla, highlighting the news of this new plant in China, in addition to the strong sales figures of the model 3 as good indicators for continued growth. Tesla is confident they will meet the 25% gross profit margin for the model 3. If forecasters are correct, Tesla shareholders will continue to reap the benefits of an increasing share price as the company further expands into the profitable Chinese and Asian markets.
This is certainly an interesting move, especially as it comes at a time when there has been a lot of uncertainty regarding the company and its current management structure.