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Tesla delivers Model 3 vehicles to Europe as stock rises

Tesla's presence in Europe is at a pivotal moment. The automaker has just delivered its first Model 3 sedans on the continent just as the corporation’s stock is rising on Wall Street.

Why is Europe such an important market for Tesla?

Tesla just shipped its first Model 3 vehicles in Europe and many investors will be watching to see if demand matches production of the cars, according to Wedbush’s managing director for equity research, Dan Ives. Ives told IG business reporter and presenter, Victoria Scholar, that ‘Tesla is in a ‘white knuckle period’ for the next six to nine months.

Europe is a key market to Tesla since the US is cutting tax credits for electric cars like Tesla, as Ives noted in a Wedbush company report.

‘Taking a step back, with the US EV tax credit getting cut by 50% to $3,750 and then again to $1,875 on July 1 the Tesla demand story in 2019 has clearly shifted from the US to Europe as pent up Model 3 demand in the region will be the major swing factor for the stock in the near-term. That said, Tesla has now shifted from a production story to a demand story, with more steady state weekly Model 3 production poised to hit 7,000 per week by the end of 2019,’ wrote Ives.

Tesla’s deliveries to Norway have been ‘so far, so good’, said Ives. However, there has been trouble as there are reports that the corporation is ending its contract with ICO, a Belgian company hired to prepare the Model 3 cars for delivery. Elon Musk, the chief executive officer, (CEO), of Tesla said the carmaker will handle deliveries by itself.

Ives also noted that in addition to deliveries in Europe, Tesla is preparing for more Model 3 production in China. Tesla is ramping up production in the Asian nation with The Gigafactory 3, a facility under construction in Shanghai.

Is Tesla still a buy?

Despite the delivery difficulties, Ives still thinks Tesla is a buy and predicts a price target of $390. Ives believes that Tesla sales in Europe have to be exceptional to prove its profitability to investors.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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