Tesla (NASDAQ:TSLA) has secured a major win in China, the world’s largest electric vehicle (EV) market. The eastern province of Jiangsu has officially approved Tesla’s Model Y EV for purchase by government and public entities. This is the first instance of a Tesla vehicle being included in China’s government procurement list.
This approval signifies a remarkable win for Tesla in China, as TSLA’s vehicles were previously banned from entering local government agencies due to concerns over data security. Interestingly, the win came after Tesla successfully addressed these concerns in April by receiving an endorsement from the China Association of Automobile Manufacturers (CAAM).
China: A Crucial Market for Tesla
China accounts for a whopping 60% of global EV sales, and its importance continues to grow as demand for battery-powered vehicles softens in the U.S. and Europe.
In terms of Tesla’s performance in this region, deliveries of China-made vehicles declined by 9% in the first half of the year compared to the same period in 2023. This is because the company faces stiff competition from Chinese EV giants BYD Company (BYDDY), Li Auto (LI), and Nio (NIO).
Thus, the approval by the Chinese government comes at a critical time for the company. It could bolster Tesla’s position in China, potentially leading to higher sales.
Is Tesla a Buy or Sell?
The government’s approval makes Tesla well-poised for growth in China. However, competition from domestic players remains a major concern.
Currently, Tesla has a Hold consensus rating on TipRanks. This is based on 12 Buys, 14 Holds, and eight Sells. The analysts’ average price target on Tesla stock of $180.92 implies a downside potential of 26.6% from current levels. Shares of the company have gained 49% in the past three months.
