Tesla price cuts show there is a method to the madness

New data shows that the European electric car maker sales It grew faster than any other automaker in February. EU registrations for Tesla cars, which reflect sales, rose to 19,249 in February from 12,860 in the same month a year earlier, according to the European Automobile Manufacturers Association.

Tesla registrations accounted for 2.4% of the total passenger car market in the European Union last month, up from 1.8% a year earlier. Total registrations of passenger cars in the EU were up about 12% from a year earlier, at around 803,000 units, while registrations of battery electric vehicles, or BEVs, were up 40% at around 97,000 units, accounting for about 12% of the total. Total sales.

For February, Tesla registrations accounted for about 20% of battery electric vehicle registrations in Europe, up about two percentage points year-on-year.

In recent months, electric vehicle (BEV) sales accounted for nearly 20% of all new vehicle sales in China and nearly 6% of all new vehicle sales in the United States in 2022.

In the first two months of 2023, Tesla increased market share of electric vehicle sales in China, according to data from the China Passenger Car Association. That monthly data includes vehicles produced in China and exported.

Monthly data from any country can fluctuate based on a number of factors. However, the various data taken together show that Tesla’s price cuts have a positive effect on its market share.

“EV price cuts are not a fad, but a trend,” Morgan Stanley analyst Adam Jonas wrote in a report Monday. The analyst adds that lower battery costs, lower lithium prices and more efficient manufacturing are driving a “deflationary trend” for electric vehicles.

He believes Tesla is the cost leader in the industry and will continue to lead in pricing. Jonas is evaluating buying the shares and has a price target of $220 per share.

Tesla’s growth by nearly 50% outpaced that of rivals such as Volkswagen (VOW.Germany), resulting in an 18% increase in registrations. This figure includes all Volkswagen sales. The German automaker is also targeting growth in the electric vehicle market.

Tesla shares rose 6.9%, to $195.88, in recent trading. Market share helps, but auto stocks trade a little like bank stocks these days. Cars are credit-based purchases, so the health of the banking sector is important.

First Republic Bank (FRC) stock rose 56%, and

SPDR S&P Regional Banking ETF

(KRE) rose 6.5%. the

Standard & Poor’s 500

And

NASDAQ Composite

They increased by 0.8% and 1.1%, respectively.

Heading into Tuesday’s trading, Tesla stock is up about 49% so far in 2023.

Write to Adam Clark at [email protected]