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Why Tesla Stock Edged Higher on Thursday

By Daniel Sparks – Aug 12, 2021 at 1:18PM

Key Points

  • Lower Tesla deliveries in China during July previously spooked some investors.
  • There's a good reason for lower deliveries in July.
  • Tesla is dependent on its China factory to hit its full-year deliveries guidance.

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Demand for Tesla vehicles may not be slumping in China after all.

What happened

Shares of Tesla (TSLA 7.67%) rose 2.1% at one point on Thursday. As of 12:45 p.m. EDT, however, the stock was up 1.3%.

The stock's gain is likely driven by a generally bullish day for many growth stocks, as well as news circulating about strong deliveries coming from Tesla's China factory in July.

Vehicle production at a Tesla factory.

Image source: The Motley Fool.

So what

A few days ago, concerns mounted about a drop in China-made vehicles being delivered to customers in the market. Though its 32,968 total vehicles made for delivery during the month were strong, 24,347 of these vehicles were exported. This means that local deliveries decreased 69% from levels in June. 

But we're learning on Thursday that there's no reason to fret about deliveries in China. "Tesla makes cars for export in first half of quarter & for local market in second half," said Tesla CEO Elon Musk on Twitter in response to a tweet about the company's production trends in the important market.

With this context, investors should spend more time focusing on total vehicles made in China in a given month rather than where they are delivered. Local deliveries in a given month aren't exactly indicative of orders if Tesla bases exporting decisions on quarterly timing rather than order trends.

Meanwhile, with many growth stocks seeing gains on Thursday greater than the S&P 500's 0.12% increase as of this writing, this market trend could be helping Tesla shares as well.

Now what

For the full year, Tesla is aiming to grow its vehicle deliveries more than 50% year over year. The company's China factory, which accounted for more than 40% of Tesla's installed manufacturing capacity in Q2, is key to achieving this target.

Daniel Sparks has no position in any of the stocks mentioned. His clients may own shares of the companies mentioned. The Motley Fool owns shares of and recommends Tesla and Twitter. The Motley Fool has a disclosure policy.

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