Tesla’s (TSLA) stock surged by as much as 10% this morning despite a broader market pullback amid the developing coronavirus pandemic.
Here’s what we think is happening.
The market saw a broad correction over the last month as the coronavirus pandemic has been worsening in several countries, especially in the US.
The S&P 500 crashed more than 30% since February before erasing some of the losses over the last 2 weeks.
Tesla also took a big dive, which was accentuated by the fact that the automaker’s stock was on a several month run that pushed its value to twice as much as its previous all-time high right before the coronavirus crisis.
However, the stock has been recovering at an impressive pace and it’s now up more than 30% since the low of last month:
This morning, Tesla’s stock surged by as much as 10% while the rest of the market was down by more than 1%.
It isn’t clear what prompted such movement in Tesla’s stock, but with the market being closed for a few days, there was a series of news that came out in the last few days that could have helped the stock:
- Elon Musk showed confidence in Tesla’s robotaxi plan
- Tesla launches discontinued Model 3 Long Range RWD as made-in-China car
- Study: Pandemic lockdowns are encouraging more consumers to buy electric cars
- Tesla sales in China hit record high during the pandemic, represent 25% of country’s EV sales
But what I think is really happening is that the market and analysts are starting to look at what the auto market is going to look like post-pandemic and many are starting to see that Tesla might be in a much better situation than other automakers.
In the short term, some automakers who are stuck in longer product cycles appear to be considering delaying some of their EV market launches while Tesla, which is seen as more nimble, seems to be moving forward with its plans.
There’s also the potential for the crisis to benefit Tesla even more in the long-term, which is nice for the company but scary for the pace of electric vehicle adoption.
Some markets, like Europe and China, are considering slowing down their emission standards for the auto industry due to the current crisis, which could encourage companies to slow down their investments in electric vehicles – resulting in lower volume EV programs.
You could argue that traditional automakers were already in a crisis due to the transition to electric cars and now when you had this pandemic on top of it, some of them might not survive.
On the other hand, Tesla is already the final form of what all automakers will be after this transition. Therefore, if it can just survive this crisis, it will be in a much better situation.
I think more people and market movers are starting to realize that.
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