What happened
Shares of Tesla (TSLA 2.70%) surged on Tuesday, rising 6.8% as of 11:40 a.m. EST.
Shares of the growth stock are likely trading higher due to a bullish day in the overall market and an analyst's note to investors saying that Tesla competitor and Chinese electric-vehicle maker NIO's (NIO 4.50%) unveiling of its electric sedan didn't impress.
Tesla stock's gain on Tuesday extends a recent bullish run, which cooled off on Monday when shares took a breather. The stock is now up 22% in 2021 and about 800% over the past 12 months.
Image source: Getty Images.
So what
NIO's new ET7, the company's first sedan model, is "good but not enough to make any critical changes from Tesla's challenge," said Citi analyst Jeff Chung in a note to investors on Tuesday. The new ET7 is expected to begin delivering in 2022.
In addition, a potential overhaul of the design of Tesla's Model S could be a headwind for NIO, the analyst said. And Tesla's Model Y SUV is well positioned to compete with NIO's EC6 model.
While news of Tesla's strong competitive positioning may be one factor helping the stock today, another reason shares are up is likely broader-market optimism. As of this writing, the Nasdaq Composite is up 0.3%.
Now what
Some investors may have been concerned that NIO could eat into Tesla's growth opportunity in China. But Chung's comments suggest Tesla is tough competition for China's own electric vehicle companies.
