Tesla’s China Connection Under Fire
Accusations of Influence Peddling
Elon Musk, CEO of Tesla Inc. (NASDAQ:TSLA), has been accused of using his influence to pressure Republicans into abandoning key U.S.-China investment restrictions. According to Rosa DeLauro, the top Democrat on the House Appropriations Committee, Musk’s actions were aimed at safeguarding Tesla’s business interests in China.
The Shanghai Gigafactory at the Center of the Controversy
Tesla’s Shanghai gigafactory, which produces around 50% of the company’s global automobile output, is at the heart of the controversy. DeLauro argues that Musk’s actions jeopardized critical legislation designed to protect U.S. supply chains and national security.
Strong Sales in China
Despite the controversy, Tesla has seen robust sales in China, driven by strong demand for its Model Y and Model 3 vehicles. In November, the company’s retail sales in China reached 73,490 units, marking a significant recovery from earlier challenges in 2024.
Competition from Local Players
Tesla faces stiff competition from local players like BYD Co., which leads the market. However, the company’s steady increase in weekly insurance registrations – 21,900 units in early December – signals growing momentum.
Third-Quarter Revenue Growth
Tesla reported third-quarter revenue of $25.18 billion, marking an 8% year-over-year growth. While the company missed Wall Street estimates, automotive revenue reached $20 billion, up 2% year-over-year.
Broader Concerns About U.S. Investments in Chinese Technology
DeLauro’s accusations highlight broader concerns about the risks of U.S. investments in Chinese technology sectors. October rules finalized by the Treasury Department aim to limit such investments in critical areas like artificial intelligence to protect national security.
Price Action
Tesla’s stock declined by 3.46% on Friday, ending the session at $421.06. Despite this drop, the company’s shares have surged 69.5% since the start of the year, significantly outpacing the Nasdaq 100 index.
Analysts’ Price Target
The latest ratings from Baird, Mizuho, and Goldman Sachs have established an average price target of $446.67, suggesting an upside potential of 5.53%.
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