Please ensure Javascript is enabled for purposes of website accessibility

Why Tesla Stock Jumped Tuesday

By Daniel Sparks - Mar 10, 2020 at 3:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shares seem to be rebounding from yesterday's 14% drop.

What happened

Shares of electric-car company Tesla (TSLA 2.55%) jumped on Tuesday, rising as much as 9.9%. As of 2:50 p.m. EDT, the stock had settled to a 4.9% gain.

The move was likely fueled by combination of a gain in the overall market following a huge sell-off on Monday and a report from Reuters, noting that the automaker has submitted a document to the Shanghai government detailing plans to increase production capacity on some parts for its vehicles made at its China-based factory.

The inside of a Tesla Model 3

The interior of a Tesla Model 3. Image source: Tesla.

So what

As of 2:50 p.m. EDT, the S&P 500 was up about 2.8%. This followed the index's nearly 8% decline on Monday. Shares of Tesla also fell sharply yesterday, declining about 14%. The stock's rise on Tuesday, therefore, may primarily reflect a rebound in the electric-car maker's share price.

But a report that Tesla is aiming to increase production capacity of some parts at its factory in Shanghai, including nearly doubling the annual capacity of cooling parts for hits Model 3 in the market to 260,000 units per year, may be fueling optimism for the automaker as well. This news suggests that demand may be strong for its China-made vehicles.

Now what

Tesla had said in its fourth-quarter update that it had installed capacity at its factory in Shanghai for a production rate of 150,000 Model 3 units per year. With Tesla reportedly planning to increase production of some parts, could demand for the vehicle in the important market be greater than expected?

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Tesla, Inc. Stock Quote
Tesla, Inc.
$699.20 (2.55%) $17.41

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/05/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.