Tesla Inc shares (NASDAQ:TSLA) mined more Wall Street favor than most public companies this year. The last 52 weeks show a 64 percent climb in stock value. However, that figure can mostly be attributed to the young automaker’s growth in western demographics. News this week makes investors confident about the likely effects from a push into China. According to Piper Jaffray, nothing stands in the way of Tesla’s success in the People’s Republic.
Piper Jaffray is a reputable equity analysis company. It also claims that Tesla will see nothing blocking its path to winning the Chinese auto market. This happens to be the planet’s largest auto market, too, and recently proved its hunger for fully electric cars. So, big things are believed to await the Elon Musk auto business.
Wall Street giant, Piper Jaffray, is even more confident in Tesla Inc shares than it was before. The investment firm believes the US electric car company offers vehicles in a league that no other Chinese carmarker has entered yet. In light of this, Tesla’s “overweight” rating was just reiterated.
The increased bullishness in Tesla Inc shares comes after Jaffray analyst Alexander Potter went to Beijing. There, he got together with a trade group for electric vehicle makers. What he learned made him confident about Tesla’s superior edge over its Chinese rivals. “We still think Tesla has little to fear from Chinese brands,” he wrote this week.
Potter insists that no other manufacturer of electric cars is as recognized for vehicle quality and performance as Tesla. “Branding and performance are just as important,” the analyst wrote. “In this regard, we think nobody can compete with Tesla.”
Potter is not sucking his assertions out of thin air either. Sales rose from just over $300 million two years ago to over $1 billion last year. That is according to an SEC 10-K filing, proving that China has a clear thirst for what Tesla has to offer.
China cars don’t touch Tesla Inc (NASDAQ:TSLA) quality
The Piper Jaffray researcher claims that anybody who has been inside an electric vehicle made in China can attest to the difference. They “just aren’t compelling consumer products,” he said. Tesla, on the other hand, in gaining more recognition for its superior vehicles. Sales in China are a show of the company’s favor in the country.
In two years, the Chinese government will roll out a quota system whereby major car manufactures will need to buy electric vehicle credits for 10 percent of total production over a year. The next year will require them to buy 12 percent. Automakers that cannot meet the quota will be able to purchase quotas from corporations that have surpassed their quotas.
There are also several other factors in favor of Tesla Inc’s success in China. Investors should consider the country’s bid to phase out non-electric cars. This would no doubt put Tesla Inc (NASDAQ:TSLA) cars in an ideal position to rake in Chinese customers. There is also the lack of quality vehicles in China, a hole foreign vehicle brands are known to fill. With the market going electric, the road transportation scene in China is prime pickings for Elon Musk and his cars.