Tesla Shares Surge 5% On Chinese Subsidies News
In a surprise move on Tuesday, the Chinese authorities has announced that subsidies for electric vehicles will not be reduced as aggressively as previously stated in an attempt to encourage greater market penetration of EVs and thus further combat the massive pollution currently plaguing the country. The subsidy will be cut by only 5% in 2014 instead of the previously announced 10% and then cut by a further 10% in 2015 rather than 20%, according to the Finance Ministry.
Shortly after the statement, Tesla saw its stock surge as high as USD196 before easing off at the end of the day. Despite the high price of Tesla Model S in China and perhaps in spite of the previous fire news causing investor doubt, share prices of the low volume electric sports car and sedan manufacturer had been steadily climbing from the November lows.
Tesla’s Vice President of Global Sales, Jerome Guillen, also announced that in the last quarter of 2013, they had blown past the company forecast and delivered a total of 6900 Model S sedans. “We look forward to 2014 with anticipation,” Guillen said during a news conference at the Detroit Auto Show. “On the sales and service side, of which I’m responsible, it’s reckless growth.” He later said that he misspoke and meant to say “relentless growth”. He said the company this year expects to double its global sales and service locations, which currently total almost 150 combined. He also said Tesla was working “feverishly” on the Model X crossover vehicle, which the company previously said would debut in the second half of 2014.
Tesla seems to be Teflon-coated, with bad news unable to stick to them. Last year, there were numerous articles written about the safety aspect of the vehicles after three fires were reported. Just last week, US safety regulators classified the Tesla move to upgrade wall adaptors and charging software as a recall.
In fact, according to a document filed online by the National Highway Traffic Safety Administration (NHTSA), Tesla is recalling a total of 29 222 Model S sedans from the year 2013 for the fix. According to the NHTSA documents, “An overheated adapter, cord, or wall receptacle, increases the risk of burn injury and/or fire.”
Elon Musk, the founder and president of Tesla, immediately took issue with the NHTSA’s use of the word ‘recall’ via his usual Twitter conduit. “Some confusion in media reports today. No Tesla vehicles are being physically recalled by Tesla,” said Musk. “The word ‘recall’ needs to be recalled,” he added. He pointed out that the software upgrade was done last month over the air and the new adaptor was being mailed to owners.
In a recent Consumer Reports magazine, Tesla Motors Inc has broken into the top 5 rankings among people surveyed by the publication, yet another accolade from the magazine that rates the Tesla Model S amongst the best cars it has ever tested. This is a promotion of six places from last year’s 11th position and they now rate behind Toyota, Ford Motor Co, General Motor Co and Chevrolet. Results are from a December survey of 1578 vehicle owners who are asked to rank brand attributes, including quality, safety, value, design and technology.