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Tesla (TSLA) surges on record performance in China and target raise

After a difficult few weeks for Tesla investors, the automaker’s stock (TSLA) is now surging on record performance in China and a Wall Street target raise.

Tesla investors had a great 2020 and early 2021, but the stock has been crashing over the last few weeks amid a broader market correction.

It erased over $100 billion in the automaker’s market capitalization.

Today, the stock is reversing with a massive surge of as much as 12%, adding billions of dollars to Tesla’s valuation.

The surge appears to be linked to the China Passenger Car Association releasing some impressive numbers for Tesla’s performance in February.

According to the association, Tesla produced 23,600 vehicles and delivered 18,300 vehicles in China last month. Most of the difference in vehicles produced is going to Europe.

This is especially impressive considering the Lunar New Year holiday limited the operations to only about three weeks for Tesla in China in February.

The start of Model Y production at Gigafactory Shanghai is expected to be helping Tesla’s performance in China.

Wedbush analyst Dan Ives wrote in a note to clients:

“We believe price cuts and the Model Y introduction were key to some of these changing market dynamics in China. That said, overall EV demand in the region looks robust with EV penetration set to go from 4.5% in China for 2020 to 10% by 2022 in this EV arms race with Tesla and its Giga footprint front and center.”

As we recently reported, Ives has a $950 one-year price target on Tesla’s stock, and he even believes that Tesla could reach a $1.5 to $2 trillion market cap within the next 2 years.

New Street Research also upgraded Tesla’s stock today to a $900 price target partly due to the ramp up in China.

In a note to clients, they said that Tesla could deliver 2 million electric vehicles in 2023:

“With Berlin and Texas ramping, Tesla should reach 2m unit capacity, even is a lot of clouds sit on tight current timelines: building permits in Berlin, a delayed Model S&X refresh, Model Y ramp-up in Shanghai, and the Cybertruck still being in the design phase. We don’t see any of these risks pushing the 2m mark beyond the end of 2022. This means Tesla should deliver over 2m units in 2023.”

At full production capacity, Tesla Gigafactory Berlin and Gigafactory Texas are expected to add over 1 million units of capacity annually.

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