On the heels of a new report of Tesla striking striking a deal with China to build an Asia Gigafactory and manufacture cars locally, shares of Tesla (Nasdaq: TSLA) headed into Tuesday with a 73% year-to-date gain.
Tesla shares rose 1.5% Tuesday after Bloomberg broke the story of the potential deal, which would see a Tesla plant built in Shanghai’s Lingang development zone. Lingang is a Silicon Valley-esque area that also houses Caterpillar and Volvo.
Reports of the deal followed an announcement that more than 6% of Tesla’s global sales were in Hong Kong, of which 7% of all vehicles sold were Teslas. That will probably change if proposed alterations to the EV incentives are put into effect, nearly doubling the price of a new Tesla as China looks to pivot from smog-producing vehicles to more eco-friendly options.
China is home to 1/6th of the world population, and its growing middle class is a large potential market for its upcoming affordable Model 3 sedan. Roughly $1 billion of Tesla’s bottom line comes from sales in the country.
China already has a foothold in Tesla, with internet company Tencent Holdings spending $5.8 billion on a 5% stake in the company back in March. Share of Tesla are poised to break all-time intraday highs, another sign that TSLA stock is advancing towards the upgraded $464 price forecast.
Tesla has yet to comment on previous inquiries made about the reported China expansion.