- Tesla (NASDAQ:TSLA) is pausing plans to expand into India
- This is because Elon Musk was not able to reach an agreement with Indian officials about import taxes
- TSLA stock will be able to rally in the future because Tesla will pursue other international markets
Tesla (NASDAQ:TSLA) is up today, even after the company paused plans to enter India’s electric vehicle (EV) market. Earlier in 2022, the EV leader seemed to be about to finally set up shop in India. TSLA stock responded well to this news.
Investors learned this morning that Elon Musk has not reached a resolution with India’s government on the country’s high import taxes. There is a clear silver lining, though. The CEO has his sights set on the promising EV market of Indonesia. The smaller nation may be willing to provide what India was not.
What’s Happening With TSLA Stock
While TSLA stock is in the green today, it isn’t because of the news out of India. This morning, Musk tweeted that his acquisition of Twitter (NYSE:TWTR) is “temporarily on hold,” while he waits for data on the platform’s fake user base. Tesla investors are able to breathe a sigh of relief as Wall Street waits for details on Musk’s plans to take over another company.
As of this writing, TSLA stock is up almost 7% for the day and shows no signs of stopping. After a difficult trading week, this catalyst is setting Tesla up to close out today on a high note.
What It Means
There are two central lessons that investors should take from this morning’s events. The first is that halting its India expansion plans is not a powerful enough catalyst to drive TSLA stock down. Would it have benefitted the company to begin producing vehicles in one of the world’s largest EV markets? Yes, absolutely. But even after the company announced that it would not be expanding into India, shares are still rising steadily. Tesla succeeded before serious talks with the Indian government began and it will keep moving forward.
Secondly, a partnership with Indonesia would provide Tesla with some excellent growth catalysts. The country is a leading producer of nickel, a key component of EV batteries. Since Russia’s invasion of Ukraine spurred a spike in nickel prices, procuring the metal has been difficult. Setting up shop in Indonesia would give Tesla access to a very important material, increasing its competitive edge over other EV producers.
Unlike India, Indonesia is likely to want to make a deal favorable to Tesla. The country has been working hard to revamp its automotive sector. Musk met with an Indonesia delegation last month to discuss a potential partnership. Now he is visiting the country to meet with its president.
The Bottom Line
Investors should remember one key takeaway. Tesla’s potential deal with Indonesia is not simply a means of international expansion. It is a strategic attempt to hedge its bets on the global supply chain while simultaneously gaining a share of a new EV market. That forward-thinking mindset will serve the company and its investors well, as Tesla pivots to stay ahead of competitors in an ever-increasing market.
TSLA stock is still battling negative market forces. While there will likely be more turbulence ahead, a partnership with Indonesia is exactly the catalyst it needs to keep moving upward.
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.