Tesla Finally Sees Some Good News (And Other Things)

Tesla Finally Sees Some Good News (And Other Things)

Summary

Tesla finally had some genuinely good news.

With Tesla being so crowded on the short side, things are quite risky for shorts right now.

There are other cross currents.

This could already be the Tesla Model Y under wraps. Source: Tesla's recent YouTube video

Today’s announcement that China is cutting import taxes on autos, from 25% to 15%, might be the first real good news Tesla (TSLA) has had in a long while.

This is straight up good news because every Tesla sold in China is imported. Moreover, the drop in import taxes is nearly immediate (from July 1). And China is a relevant Tesla market, having represented 17.2% of Tesla’s 2017 revenues as well as 19.0% of its automotive revenues. China, of course, is the largest auto market in the world (so there's potential to sell even more than Tesla presently sells).


A drop in import tariffs can help Tesla in two possible ways:

Either through an improvement in margins on cars sold in China, if Tesla does not pass the lower tariffs into its sales price.

Or through an improvement in Chinese sales, if Tesla passes the lower tariffs and thus lowers its car prices in China.

We Should Not Forget The Model Y
While all this is good news for Tesla, oftentimes what Tesla promises is even more relevant than any fact. That’s why we should never let it slip from our minds that the Model Y is just around the corner. Indeed, not only is the Model Y unveiling just around the corner, but the very announcement that Tesla will unveil it at a given date is even closer.

Here’s what happened in the recent past, when we went through the same process with the Model 3:

Source: seekingalpha

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