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Tesla Analyst Sees Conciliatory Approach To Chinese Regulators, EV 'Golden Age' Ahead

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Tesla Analyst Sees Conciliatory Approach To Chinese Regulators, EV 'Golden Age' Ahead

Tesla Inc (NASDAQ: TSLA) was warned this by China's State Administration for Market Regulation regarding quality issues with respect to EVs sold in China.

An analyst at Wedbush sees the issue as a blip on the radar for Tesla and is instead focusing on the automaker's big picture. 

The Tesla Analyst: Daniel Ives maintained a Neutral rating on Tesla with a $950 price target, with a bull case target of $1,250.

The Tesla Thesis: Tesla's approach of taking a more conciliatory tone with China is encouraging, Ives said in a Tuesday note.

A standoff with Chinese regulators will be the last thing a Tesla investor would want to see, given that the company's sales in China more than doubled in 2020 despite the COVID-19 pandemic and are on track to account for about 40% of its volume sales by 2022, the analyst said.

Related Link: Tesla Gets A Street High $1,200 Price Target: 'The Fireworks Aren't Over Yet'

The regulatory agency has let off Tesla with a slap on the wrist, urging the company to focus on strengthening internal management around quality controls in the country, he said. 

"As such, Tesla 'sincerely accepted the guidance of government departments and deeply reflected on shortcomings,' a smart move rather than fight any issues," Ives said.

Tesla needs to navigate around any quality and regulatory issues in China over the coming months, as a "golden age" of EVs is on the horizon, the analyst said.

"With some contained recalls and quality issues for Tesla, we believe this is more 'growing pains' as the company is seeing an EV demand trajectory even beyond bull case expectations for 2021 in this key region."

TSLA Price Action: At last check, Tesla shares were sliding 2.32% to $843.41. 

Related Link: Tesla Apologizes To China State Power Company After Viral Video

Photo courtesy of Tesla. 

Latest Ratings for TSLA

DateFirmActionFromTo
Apr 2021Canaccord GenuityMaintainsBuy
Apr 2021Credit SuisseReiteratesNeutral
Apr 2021Goldman SachsMaintainsBuy

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