Tesla (NASDAQ:TSLA) stock recovered on Oct. 10 after the company announced a new record for monthly production from its Shanghai factory.
The company said it sold 83,135 made-in-China Teslas during September, 8% more than in August. China’s entire electric vehicle production was only up 5%.
Tesla shut down China production for most of July to upgrade the plant’s capacity from 17,000 cars/week to 22,000. It resumed full production in June after a Covid-19 lockdown.
Globally, Tesla said it delivered 343,830 vehicles during the third quarter. The stock opened on Oct. 10 at about $224/share, a market capitalization of $700 billion on expected 2022 sales of $67 billion.
Tesla’s ability to overcome scaling problems has made it the world’s most valuable car company. While shares are down 36% in 2022, they have delivered gains of 874% since the manufacturing problems were fixed.
Tesla is now stockpiling cars outside the China factory, aiming to deliver as many as 450,000 in the fourth quarter.
Tesla now produces 10 times more cars than any of the China-based competitors trading in the U.S. market, Xpeng (NASDAQ:XPEV), Nio (NYSE:NIO) and Li Auto (NASDAQ:LI). Most of China’s electric car companies remain unprofitable. An exception is BYD (OTCMKTS:BYDDF), which made 641,350 cars in the first half of the year and earned $505 million. Tesla had a net income of $5.5 billion during the first half of this year.
Most analysts following Tesla at Tipranks still rate it a “buy,” with an average price target of over $300/share.
Tesla’s reliance on China, however, comes at a cost. CEO Elon Musk recently tweeted in support of China’s ambitions in Taiwan. The U.S. government’s actions against Chinese semiconductor production also threaten to upset Tesla’s plans.
TSLA Stock: What Happens Now?
Tesla bulls may see a bargain as Musk continues to sell shares to fund his acquisition of Twitter (NASDAQ:TWTR). He hopes to turn the social network into a “super app” rivaling Tencent’s (OTCMKTS:TCEHY) WeChat.
The TSLA stock price may continue to fall until the Twitter saga ends, but the company’s fundamentals remain strong.
On the date of publication, Dana Blankenhorn did not hold (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.