By Adam Clark and Al Root
When Elon Musk first started cutting prices for Tesla vehicles, some observers took it as a sign of weakness. It was anything but.
Price cuts are helping Tesla's (ticker: TSLA) sales and boosting its market share in Europe and elsewhere.
New data show that the electric-vehicle maker's European sales grew faster than those of any other car manufacturer in February. European Union registrations of Tesla cars, which reflect sales, rose to 19,249 this February from 12,860 in the same month the previous year, according to the European Automobile Manufacturers' Association.
Tesla's registrations represented 2.4% of the total EU passenger car market last month, up from 1.8% the year before. Total EU passenger car registrations rose by about 12% from the previous year, coming in at about 803,000 units, while battery-electric vehicle, or BEV, registrations were up 40% at about 97,000 units, accounting for about 12% of total sales.
For February, Tesla registrations accounted for about 20% of battery-electric vehicle registrations in Europe, up about two percentage points year over year.
In recent months, BEV sales have accounted for roughly 20% of all new-car sales in China and almost 6% of all new-car sales in the U.S. in 2022.
In the first two months of 2023, Tesla's market share of BEV sales also increased in China, according to data from the China Passenger Car Association. That monthly data includes vehicles produced in China and exported.
Monthly data from any country can fluctuate based on a number of factors. Taken together, however, the various data show that Tesla's price cuts are having a positive impact on its market share.
"EV price cuts are not a fad, but a trend," wrote Morgan Stanley analyst Adam Jonas in a Monday report. Lower battery costs, lower lithium prices, and more-efficient manufacturing are leading to a EV "deflationary trend, " adds the analyst.
He believes Tesla is the industry's cost leader and will continue to lead on pricing. Jonas rates shares Buy and has a $220 price target for the stock.
Tesla's growth of nearly 50% outstripped that of rivals such as Volkswagen (VOW.Germany), which increased registrations by 18%. That figure includes all VW sales. The German car maker is also targeting growth in the electric-vehicle market.
Tesla shares are up 6.9%, at $195.88, in recent trading. Market share helps, but car stocks are trading a little like bank stocks these days. Cars are credit-based purchases, so the health of the banking sector matters.
$First Republic Bank(FRC-N)$ $(FRC)$ is up 56%, and the SPDR S&P Regional Banking ETF $(KRE)$ is up 6.5%. The S&P 500 and Nasdaq Composite are up 0.8% and 1.1%, respectively.
Coming into Tuesday trading, Tesla stock had risen about 49% so far in 2023.
Write to Adam Clark at adam.clark@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
March 21, 2023 13:21 ET (17:21 GMT)
Copyright (c) 2023 Dow Jones & Company, Inc.
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