Last week, it was reported that Tesla (NASDAQ:TSLA) had begun Model Y deliveries in Europe. While this was certainly good news, it came at a time when geopolitical tensions were pushing markets down. For this reason, TSLA stock did not react well to the announcement. However, more progress has been made on the European expansion front. Even as the Russia-Ukraine conflict escalates, shares are back in the green.
What’s Happening With TSLA Stock
This week began with good news that has sent TSLA stock shooting up. The company’s Gigafactory in Berlin is about to receive final production approval. Electrek reports that this comes after Tesla spent months “in limbo” waiting for the regulatory approval it needed.
March is off to a better start for TSLA stock than February. Since yesterday, it has been rising steadily following a week of growth. As of this writing, it is up 2% for the day, and despite some early turbulence, it seems poised to keep moving upward.
Why It Matters
This hasn’t been an easy year for Tesla. Negative market forces, coupled with the bad press to which Elon Musk is prone, have made it difficult for TSLA stock to get back to where it was in 2021. While shares are also out of the red for the month, retaining its spot as leader of the electric vehicle (EV) race is growing increasingly difficult.
This development regarding the Berlin Gigafactory is significant, as it will provide exactly the catalyst Tesla needs. Early in the year, Electrek reported that the company’s UK sales had helped it reach a new milestone as it secured 10% of the auto market.
At the center of Tesla’s plan to conquer Europe’s EV market is the Berlin Gigafactory. The centrally located facility will help it significantly increase production and distribution. Last month, a large number of Model Ys were spotted on its grounds. Tesla has been taking orders from European customers for the new model for months, and interest seems to be high. The Model 3 was popular in Europe, and there’s every reason to believe that the Model Y will be at least as in demand, if not more so.
What It Means
As Electrek notes, Tesla “has yet to secure the needed environmental permit to start producing vehicles for customer deliveries.” However, it seems like it is about to, clearing the final regulatory hurdles that stand between it and new record EV sales in a booming market. Tesla is already making deliveries in the UK, as well as Wales, Scotland and Northern Ireland.
The green light to start amping up production in Europe will be a significant boost for TSLA stock. Demand for EVs in the UK and EU has been rising since 2021 and is not expected to stop. The company is working hard to gain a share of a booming market ahead of its competitors. When it receives the thumbs up to begin production in Berlin, Europe’s EV market will be Tesla’s for the taking.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
