Tesla Inc. has been given the go-ahead to start selling its Shanghai-made Model Y sports utility vehicle in China, Reuters reported.
China’s Ministry of Industry and Information Technology published the approval for Tesla’s (TSLA) Model Y vehicles on its website on Monday, Reuters said. The move comes after the electric car maker applied for sales permission for the Shanghai-made Model Y SUV earlier this month.
Tesla, which already sells its Model 3 electric cars in China, has been building new car manufacturing capacity in Shanghai to make its Model Y SUVs. It started delivering vehicles made at its Shanghai factory last December and sold more than 13,000 vehicles in China in October, according to the report.
The Shanghai car factory, earmarked as central to Tesla’s global growth strategy, seeks to produce 150,000 Model 3 sedans this year and has started exporting some vehicles to Europe. The company also plans to start making electric vehicle chargers in China in 2021, as it looks to step up sales in the world’s biggest car market.
Meanwhile, Tesla stock has skyrocketed 600% year-to-date, leaving the Street sidelined on the stock. The Hold analyst consensus breaks down into 9 Holds, 9 Sells and 10 Buys. That’s with an average price target of $ 390.13, implying 33% downside potential lies ahead over the coming 12 months.
As competition is ramping up from other electric vehicle makers, Needham analyst Rajvindra Gill is sticking to his bearish Sell rating on the stock, as he argues that this “could hurt the steep sales ramp that Tesla needs to achieve in order to justify its valuation.”
“Despite Tesla’s recent accomplishments, such as its quarterly profits in the past 4 quarters and record deliveries, we are bearish on the stock due to increasing competitive pricing pressure, increasing OpEx to support Gigafactory Shanghai (and later Europe) and Model Y ramps, and the automaker’s history of profitability issues,” Gill commented in a note to investors.
Moreover, “we expect the company to experience obstacles and setbacks as it scales manufacturing of the Model Y and Cybertruck. We do not believe the company has sufficient earnings leverage to justify its high multiple,” the analyst said.