News

Tesla Stock Surges Amid Market Turmoil

James L. Flint

• November 21, 2023

Tesla stock (ticker: TSLA) is making a strong comeback, leaving investors curious about its recent surge. While major indexes are seeing a decline with the S&P 500 and Nasdaq Composite dropping by 0.2% and 0.3% respectively, Tesla stock is up by an impressive 2.1% in early Tuesday trading.

One possible explanation for this boost could be the relief felt after a week of turbulence at Elon Musk's social media platform X. Musk made a controversial endorsement via a series of tweets on X, where he supported a claim suggesting that Jewish communities are inciting hatred against white people. This statement received backlash from various organizations, including the Anti-Defamation League and the White House.

Prior to Musk's tweet, Tesla stock was hovering around $243. Although it has seen a slight dip to $242, it remains resilient considering the Nasdaq's nearly 1% increase during the same period.

In addition to these developments, there is some positive car-related news. Deutsche Bank analyst Emmanuel Rosner revealed that Tesla has begun rolling out an updated version of its driver-assistance software called Full Self Driving (FSD). This new release, known as Version 12, boasts several enhancements, including improved speed control, better pedestrian recognition, and more efficient interactions with other vehicles on the road.

While Tesla has not yet provided an official comment on the release, it is worth noting that not all drivers will receive the update simultaneously. Musk announced on X back on November 12 that the latest update would be available in approximately two weeks.

Tesla's Stock Gains Driven by Electric-Vehicle Growth

Tesla's stock has been experiencing significant gains, and there are several key factors contributing to this success. One of the primary reasons is the overall growth of the electric-vehicle (EV) market. In Europe, registrations of battery electric vehicles (BEVs) have grown by approximately 30% year over year in October, according to the European Automobile Manufacturers' Association. This growth has alleviated concerns among investors about a slowdown in EV sales due to higher interest rates and a global economic slowdown.

Europe has seen impressive numbers in terms of BEV sales throughout the year. Approximately 1.6 million BEVs have been sold in Europe year to date, representing about 15% of all new car sales. This figure has increased from around 12% during the same period in 2022.

Tesla, in particular, has experienced a surge in market share within Europe's BEV market. In 2023, its European market share rose to nearly 18%, compared to about 13% in 2022. It is worth noting that Tesla's market share can vary on a month-to-month basis due to export sales from its Chinese plant. In October, Tesla held approximately 11% of the European BEV sales market, while in September, its market share reached about 18%. It is important to consider a lag in plant shipments and registration data when analyzing these fluctuations.

The reduction in prices has played a significant role in Tesla's ability to drive volume sales in 2023. Certain versions of the Model Y now cost around $17,000 less than they did a year ago. As a result, Tesla has shipped approximately 1.3 million units in the first three quarters of this year, compared to about 909,000 units during the same period last year.

While Tesla's transaction prices in the U.S. saw a 5% increase in October compared to September, according to Kelly Blue Book data, this turnaround marked the first month-over-month increase in 2023. The cessation of pricing pressure is a favorable development for investors and can positively impact the company's stock.

In conclusion, the reasons behind Tesla's recent stock gains are multifaceted. The growth of the overall electric-vehicle market, particularly in Europe, has played a crucial role. Additionally, Tesla's market share in Europe has increased significantly, bolstered by price cuts and strong shipment numbers. The recent uplift in transaction prices in the U.S. also indicates positive momentum for the company. Whether attributed to a specific reason or a combination of factors, Tesla investors are showing increased optimism about the company's prospects.