Tesla Stuck in Neutral after Delivering First China-made Model Y Crossover

Shares in electric vehicle (EV) pioneer Tesla, Inc. (TSLA) failed to gain traction Monday, despite the company tweeting that it has commenced deliveries of its first Shanghai-produced Model Y Crossovers in China.

The development marks an important milestone for the Californian-based carmaker that wants to ramp up its vehicle sales in the world’s largest auto market from around 500,000 in 2020 to 20 million by the end of the decade.

The Model Y rolls off the production line just 12 months after Tesla made its first delivery of the hugely popular Chinese-made Model 3 – a vehicle that claimed the mantle of China’s bestselling EV in 2020, with sales of almost 140,000 sedans. Manufacturing cars locally boost the company’s profit margins by reducing delivery costs. “The cost of vehicles produced in Shanghai in Q1 is already lower than the cost to produce the Model 3 in Fremont,” CFO Zachary Kirkhorn told investors last year, per Barron’s.

Through Monday’s close, Tesla stock has a market value nearing $800 billion and trades up a massive 704% YTD. Since the start of the year, the shares have climbed an impressive 17%.

Wall Street View

Earlier this month, Wedbush analyst Daniel Ives raised his target on the stock to $950 while maintaining his ‘Neutral’ rating. Ives believes that China will make up 40% of Tesla’s global deliveries by 2022. He sees EVs accounting for 5% of global auto sales by the end of 2021 and 10% by 2025.

Understandably, most other sell-side analysts sit on the fence, given Tesla’s surging share price over the past 12 months. The stock receives 8 ‘Buy’ ratings, 13 ‘Hold’ ratings, and 12 ‘Sell’ recommendations. All eyes will be on the company’s financial results next week, where Wall Street expects the EV carmaker to report a full-year profit for the first time.

Technical Outlook and Trading Tactics

Since plunging to the 200-day simple moving average (SMA) during the pandemic-induced sell-off, Tesla shares have trended sharply higher. More recently, price appears to be losing momentum, with the relative strength index (RSI) dropping below the overbought threshold.

Therefore, active traders should focus on buying retracements to the $660 level, where the stock finds support from a multi-month uptrend line and the 50-day SMA. Given there’s limited overhead resistance, consider targeting a move to the psychological $1,000 mark. Protect against a sudden reversal by placing a stop-loss order somewhere below the trendline.

For a look at today’s earnings schedule, check out our earnings calendar.