by
Text size
Tesla shares fell when the company raised prices on its website earlier this month.
Chris Delmas / AFP via Getty Images
Tesla
The stock starts a new week on a steady basis, at least in part because of CEO Elon Musk’s optimistic comments about demand for electric vehicles.
Most stocks were higher on Monday morning, with gains of about 1.7% on futures in both
S&P 500
and
Nasdaq Composite,
but
Tesla
(ticker: TSLA) the stock was doing even better. It increased by almost 3% in pre-purchase transactions.
Exactly why any stock outperforms in the short term is hard to reveal, but Musk, who spoke at a Bloomberg conference in Qatar on Tuesday, is likely to be a key player. Although his interview touched on his purchase agreement
Twitter
(TWTR) and Tesla employment levels — especially watchmakers for Tesla investors — have not changed much on these issues.
The biggest issue is probably comments about demand and competition. Musk said the biggest restrictions on his company are related to raw materials and production. It focuses more on this than on competition from existing car manufacturers claiming EV market share or start-ups.
“As one knows who has tried to order a Tesla, the demand for our cars is extremely high and the waiting list is long,” Musk said. In other words, Musk believes he can sell all the EVs Tesla can build in the near future. This is despite any new competition or price increases due to inflation.
Battery-powered electric vehicles currently account for about 10% of global light vehicle sales, according to Credit Suisse analyst Dan Levy. Looking at the largest car markets, EVs share of new vehicle sales is higher in China and lower in the US
Electric vehicles occupy a larger market share, but investors worry that inflation could affect demand for new vehicles. Tesla shares fell 8.5% on June 16 following the announcement of price increases on Tesla’s website. But Musk’s comments show that car buyers are not giving up on buying new electric vehicles.
This was the best news for Tesla that emerged from Tuesday’s conference.
Among all the other issues that Musk caught up with,
Twitter
may be the second most important, but little new information has emerged on this front. Musk is still concerned about the share of daily usage on the bots-generated social media platform, an issue he said saying his deal to buy the company is pending.
The potential purchase was an advantage for Tesla shareholders, who seem to be worried that Twitter’s operation could distract Musk. Tesla shares have fallen about 40% since the announcement of Musk’s share, while the Nasdaq Composite has fallen 24%.
Tesla shares are volatile and can be expected to fall more than the Nasdaq in a bear market, but Tesla also reported surprisingly strong first quarter results during this period. The company earned more than $ 3.20 per share during this period, while Wall Street was looking for more than $ 2.20.
Write to Al Root at allen.root@dowjones.com
