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Tesla Sets the Stage for Record-Breaking Deliveries Amid Stock Surge and Chinese Market Triumph

Word on the StreetTuesday, Dec 24, 2024 1:00 am ET

1min read

As the fourth quarter draws to a close, Tesla (TSLA.US) is on the verge of breaking its previous delivery records. The company is projected to deliver a total of 515,000 vehicles in the fourth quarter, marking a significant year-over-year growth compared to 2023's total. This sets the pace for maintaining Tesla's strong market momentum, as reflected in its 2.3% stock price increase on Monday. Short-term trading volumes have experienced a minor dip, which is unlikely to dampen Tesla's upward trajectory, fueled by factors such as autonomous vehicles and artificial intelligence developments.

The renewed optimism around Tesla is partly attributed to the anticipated easing of regulations on autonomous vehicles by the incoming administration, which could expedite the adoption of Tesla's autonomous driving technology. Investors have also responded positively to CEO Elon Musk's projections during the third-quarter earnings call, where he announced a 20%-30% increase in vehicle sales by 2025.

Tesla's stock has demonstrated a significant surge, bolstered by a series of favorable developments. The company reported better-than-expected gross margins in its recent Q3 earnings, with an overall margin of 19.8% and automotive gross margin at 17.1%, excluding regulatory credits. The market has begun to price in improvements in the short-term fundamentals, alongside cost-reducing measures like layoffs and renegotiated supply contracts, despite the need for caution regarding their sustainability.

Moreover, Tesla's market performance has been supported by its recent achievements in China, where the company has seen record sales. The first week of December witnessed a sales record of 21,900 vehicles, contributing to a strong quarterly outlook. November also marked Tesla's best monthly sales performance in China for the year, selling 73,000 vehicles. If this momentum continues, December could set a new record, alleviating concerns about demand and margins.

Financial analysts have taken notice of Tesla's robust showing. Several have adjusted their price targets upward, reflecting increased confidence in the company's trajectory. Despite market fluctuations, Tesla remains a formidable player, with analysts from major investment firms indicating strong confidence in its continued success, especially given the dynamism displayed in the Chinese market.

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