Robert W. Baird & Co. Analyst Ben Kallo says he expects to see growth return to Tesla Motor Inc’s (TSLA) story in China. He says weakened demand in China has had an impact on the stock price in the short term, but he doesn’t expect the effect to continue.
“In the short term, I think obviously it’s had an impact on the stock price for Tesla, and that is really the first time they, in a very loud way with Elon at the Detroit Auto Show, have brought it up,” Kallo says. “Tesla had spoken about exploding demand. Now there had been other regions where their similar type of demand characteristics have occurred, particularly in some parts of Northern Europe — also Germany was slower to develop than Tesla had originally expected — but because China is such a big market, and because Elon had talked about China being a major part of the growth story, that it reached into a lot of negative attention from investors.”
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Kallo says Tesla has already improved operations in China, including replacing some key employees and redoing the ways that they install charging systems. He believes that will help increase demand in the region.
“In a couple of quarters, well within this year, I expect to see that growth aspect returning to Tesla’s growth story for China, and I expect that the stock will actually rebound as we hear more about them making progress and fixing the issues on the ground there,” Kallo says.
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