EV major Tesla (NASDAQ:TSLA) slid in trading on Friday after China announced that it was going to limit the export of some graphite products. China stated that export permits will be required for certain graphite products due to national security reasons.
Don't Miss our Black Friday Offers:
- Unlock your investing potential with TipRanks Premium - Now At 40% OFF!
- Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter
China is one of the world’s top graphite producers and exporters and refines 90% of the world’s graphite into the material that is used in almost all EV batteries. According to a Reuters report, the top buyers of graphite from China include Japan, the United States, India, and South Korea.
A spokesperson for China’s Ministry of Commerce commented, “China’s normal adjustment of export controls does not target any specific country or region, and exports that comply with relevant regulations will be permitted.”
This move by China comes amid rising geopolitical tensions between the U.S. and China. Earlier this year, China had restricted the export of two key metals when it comes to the manufacturing of semiconductors.
What Does This Mean for Tesla?
China’s move to limit graphite exports could result in increasing the raw material cost for EV companies like Tesla and could result in the company looking at graphite suppliers outside China. Tesla and other EV manufacturers have already started looking at Australia to secure its graphite supply. Earlier this year, Tesla signed a supply deal for graphite concentrate with Magnis Energy Technologies in Australia.
The company’s recent Q3 results proved to be a disappointment as they missed estimates while the company’s CEO, Elon Musk, also warned about production challenges.
Is TSLA a Good Stock to Buy?
Analysts are cautiously optimistic about Tesla, with a Moderate Buy consensus rating based on 13 Buys, 14 Holds, and four Sells. The average TSLA price target of $254 implies an upside potential of 20.1% from current levels.
