Shares for Tesla, Inc. (TSLA), which crashed last week, resumed their previous upward trend, rising by as much as 5% in trading on Monday, Nov. 22. As of this writing, Tesla stock is changing hands at $1,175.28, up 3.36% from the day's start.
The ostensible reason for the jump in the stock price was a tweet from Tesla Chief Executive Officer Elon Musk stating that the company was planning to introduce the Model S Plaid, its latest luxury electric vehicle, in China next March. The country is a growing market for Tesla cars and an important manufacturing hub for its exports to overseas markets.
- Tesla shares jumped by 5% after CEO Elon Musk tweeted that the company would release the Model S Plaid in China next March.
- The Model S Plaid is the latest luxury vehicle from Tesla.
- While China is an important market for Tesla, the success of Model S Plaid there may not make much of a dent in the company's balance sheet.
The 'Best Performing Sedan' and China
Deliveries for the Model S Plaid, Tesla's latest luxury electric vehicle, started earlier this year. With an estimated range of 396 miles on a single charge and a top speed of 200 miles per hour, the company calls the Model S Plaid the "best performing sedan ever built." That performance, however, doesn't come cheap; the vehicle goes for a price of $129,990. Like other Tesla vehicles, the Model S Plaid is also beginning to generate controversies. A Model S Plaid car caught fire in July in Pennsylvania this year while the driver was asleep at the wheel.
China is fast becoming Tesla's most important market. The country, which is the world's biggest automobile market, accounted for roughly half of Tesla's sales in its home country in the latest quarter. China also figured prominently in the previous quarter, when cars made at the Shanghai Gigafactory were responsible for most of the deliveries made for the Model 3 and Model Y.
Success in China
While investors may have given a thumbs-up to the news, success for the Model S Plaid in China is far from certain. The company faces competition from a slew of local car makers who have garnered a majority share in the rapidly developing electric vehicle market.
The model's premium pricing, expensive even by the standards of developed markets, may also get in the way. An overwhelming share of Tesla's China revenue comes from sales of Model 3 and Model Y, its economy electric cars. There is not much information available publicly on sales of Model S, the other luxury vehicle in Tesla's stable, in the country. The Model S was referred to as a "status symbol for the rich and wealthy in China" after it was launched, meaning that its successor may also have a limited market and fierce competition from established car makers aware of China's importance to their balance sheet.
For example, German car maker Volkswagen AG (VWAG) generates about 41% of its car sales from China and ranked third in electric car sales this past October, according to reports.