What happened
Tesla (TSLA 4.55%) shares rose over 5% in Tuesday trading and held onto a gain of 3.6% as of 3:40 p.m. ET. The move came after a vote of confidence from one widely followed tech investor and as CEO Elon Musk chimed in on a report about the company's battery supply.
So what
Yesterday was a volatile day in the stock market, and Tesla shares were no exception. While the shares were down along with much of the market as fears of a financial crisis loomed, Cathie Wood added new Tesla shares to her family of ARK Invest mutual funds. Tesla stock ended the day slightly higher yesterday, and that momentum continued today after news of Wood's purchases surfaced. But there was news from the company itself that also helped boost confidence today.
After reports surfaced that Tesla and China-based BYD were ending a cooperative relationship for electric vehicle (EV) battery supply, Elon Musk turned to Twitter to deny the reports.
Now what
While BYD and Tesla are competitors for Chinese EV buyers, the two companies also have a supplier-customer arrangement. BYD has been providing Tesla's German factory with EV batteries since the plant opened last year. Reports that the end of that supply deal earlier this year ended the relationship were met with denials from both Musk and BYD representatives. Musk took to social media to say, "That media report is false. Relations between Tesla and BYD are positive," reports Reuters. BYD also stated that the reports of the end of the supply agreement weren't accurate.
Image source: Tesla.
Tesla produces its own batteries for some of its vehicle manufacturing but also utilizes outside suppliers. The relationship with BYD is somewhat complex as Tesla works to grow its EV business in China where BYD dominates the market. BYD delivered nearly 1.9 million units in 2022, most of which were in its home market. Tesla's global operation delivered just 1.3 million last year by comparison.
An end to their battery-supply relationship could have been taken as the sign of a demand slowdown for Tesla. The outright denial by both parties has investors following Cathie Wood's lead today by buying shares in Tesla.
