While electric vehicle giant Tesla (TSLA) has been having a rough go of things lately, never let it be said that it cannot adjust and work to get things back up to pace. In fact, it just set up a new deal in Mumbai that will bring a Tesla showroom to India, and right at the same time that the United States is looking to drop tariffs on Indian cars. That sent Tesla shares up modestly in Wednesday afternoon’s trading.
This news comes at a good time for Tesla for a few reasons, not least of which is the report of declining sales. But another reason also came available, as the United States is reportedly considering a zero tariff on cars made in India. Though New Delhi is reluctant to drop down such duties so far, reports note, it apparently is at least considering further cuts.
Given that tariffs on imported cars are as high as 110%, which are some of the steepest around, a drop to 0% would be a pretty big win for Tesla. But any kind of drop would undoubtedly be welcome, and represent a major potential advance for sales in India, and profits from said sales accordingly.
An Unexpected Boost
With news of declining sales studding the headlines for Tesla of late, this news represents a breath of fresh air. Tesla reportedly is paying $446,000 for a year of a 4,003 square foot space in Mumbai, which is, roughly, the size of a basketball court. And there, Tesla will show off its line of available vehicles. The deal also calls for annual rent increases of 5% until the fifth year, when it reaches $542,000.
Interestingly, Tesla previously expressed an interest in opening up sales in India before, but later dropped the idea. Just why the idea was dropped is unclear, but it seems to be back in play thanks to this move. Indeed, Tesla also has plans for a New Delhi showroom as well, though there is less said about the space in that city.
Is Tesla a Buy, Sell or Hold?
Turning to Wall Street, analysts have a Hold consensus rating on TSLA stock based on 13 Buys, 12 Holds, and 10 Sells assigned in the past three months, as indicated by the graphic below. After a 55.84% rally in its share price over the past year, the average TSLA price target of $346.72 per share implies 27.56% upside potential.
