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Why Tesla Stock Moved Higher on Monday

By Daniel Sparks – Feb 10, 2020 at 11:24AM

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The electric-car maker's factory in China is reportedly up and running again.

What happened

Shares of Tesla (TSLA -6.32%) popped on Monday, rising as much as 9.6%. As of 12:00 p.m. EST, however, the stock was up about 2%.

The stock's move follows a report over the weekend that the electric-car maker's factory in Shanghai will resume production on Monday with the help of the Shanghai municipal government.

A red Tesla Model 3

Tesla's Model 3. Image source: Tesla.

So what

Tesla previously delayed the reopening of its factory in China following a pause in production for the Chinese Lunar New Year, citing concerns about the coronavirus outbreak in the country. But Tesla's new factory will resume production on Feb. 10, Reuters reported on Friday evening.

"In view of the practical difficulties key manufacturing firms including Tesla have faced in resuming production, we will coordinate to make all efforts to help companies resume production as soon as possible," Shanghai government spokesman Xu Wei told Reuters.

Now what

Tesla's new factory in China is critical to the company's growth plans in 2020. The new factory is building vehicles specifically for the local market, allowing the automaker to bypass a costly import tax.

By being able to price the Model 3 competitively in China, Tesla is positioned to capitalize on strong growth in the world's largest auto market.

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Tesla. The Motley Fool has a disclosure policy.

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