Tesla Stock Rebounds as Shanghai Factory Announces Increased Production in Q4

Tesla's stock price rebounded along with the broader market on Monday. Additionally, Tesla has new developments in the Chinese market.

Tesla Vice President Tao Lin posted on Weibo that the Shanghai Gigafactory has begun its production increase for the fourth quarter. Generally speaking, the fourth quarter is the highest delivery volume quarter for Tesla; and the Shanghai factory, as its largest assembly plant, not only serves the domestic market in China but also supplies other regions around the world.

Currently, concerns about the increasing demand for electric vehicles and intensified competition in the Asia-Europe region are growing. The news that Tesla's largest factory has confirmed an increase in production undoubtedly provides a strong boost for the electric vehicle manufacturer.

During the midday trading, Tesla's stock price increased by more than 3%.

In the Chinese market, Tesla's sales performance in September was strong. According to the electric vehicle industry media CNEVPost, data from the China Passenger Car Association (CPCA) shows that Tesla sold 71,525 vehicles in China in September. Although this sales figure represents a slight decrease of less than 1% compared to the same period last year, it is a 25% increase compared to August and marks the second-highest monthly sales record of the year, only behind March's 74,127 vehicles.

The China Passenger Car Association stated that Tesla's share in the Chinese electric vehicle market has slightly increased from 8.33% to 8.66%. This growth is partly attributed to Tesla's introduction of the Model Y Long Range (Model YL) for the Chinese market, which is an enlarged version of the Model Y series.

The three-row, six-seat Model YL was released in August and began deliveries in early September. The newly launched six-seat variant allows Tesla to compete in the larger electric SUV segment in China.

The launch of Model YL has a driving effect on sales, as seen in the wholesale volume (including exports) of Tesla's China-made Model Y: in September, the wholesale volume of this model increased by 17% year-on-year, reaching 59,000 units.

Driven by the rising popularity in the Chinese market, strong delivery performance in the third quarter, and the boom in the artificial intelligence industry, Tesla's stock price surged more than 30% last month. The current question is whether the company can maintain this growth momentum as fall arrives and the U.S. federal electric vehicle tax credit policy is set to be eliminated, which could weaken Tesla's sales in the U.S. market.

Similar to Tesla, its stock price movement is often not closely related to its fundamentals.

Barclays analyst Dan Levy stated that Tesla is an "OG Meme Stock," and its large retail investor base continues to maintain this characteristic.

"There is a large and highly active group of retail investors driving stock prices," Levy said in an interview with CNBC. "We have repeatedly mentioned that fundamentals are completely irrelevant here. That's also why the stock's P/E ratio is absurdly high. Other technical factors are also driving stock prices, including the relative performance of the 'Magnificent 7' tech giants and options trading activities, which are far more important than conventional fundamentals."

Tesla will release its earnings report after the market closes on October 22, which may provide investors with another reason to buy (or sell) the stock.