Why Tesla Put the Pedal to the Metal Today

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What happened

Shares of electric car superstar Tesla (NASDAQ:TSLA) accelerated 2.5% as of 12:10 p.m. EDT Monday, continuing a winning spurt that began late last week.

As CNBC reported, on Thursday Tesla’s Tesla Energy Ventures subsidiary applied to the Texas Public Utility Commission to “sell electricity directly to customers in Texas.”

So what

As you’ve probably heard, Tesla has been building a global business in the new field of battery warehouses, setting up electricity storage facilities in Australia, Belgium, and California. In Texas, it’s building two more battery facilities – one near Houston and another near Austin – totaling hundreds of megawatts of capacity.

This seems somewhat different from that.

Rather than just storing electricity produced by other companies, and feeding it back into the grid as needed to prevent blackouts and brownouts, Tesla’s new license would authorize it to produce and sell electricity directly to consumers, utilizing a sales force shared with the Tesla division that sells home solar roofs.

Now what

It’s not 100% clear how Tesla intends to produce the electricity that it wants to sell – whether through solar panels (the logical conclusion), or windmills (very popular in Texas), or cogeneration of electricity at its Austin gigafactory.

For that matter, Tesla might only be planning to buy electricity when it’s cheap, store it in its battery warehouse, and then resell the power whenever it’s dear. We simply don’t know. (TexasMonthly, which first reported on Tesla’s application, laments simply that “details … are scant.")

What is clear is that Tesla is growing and expanding into new markets once again. For investors today, that seems to be plenty to send Tesla shares higher.

Why is Tesla’s share price rising?

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Tesla (Nasdaq: TSLA) shares closed 2.7% higher on Monday (30 August)

The electric carmaker is reportedly in discussions with Indian auto parts suppliers

Elon Musk, Tesla’s CEO, has signalled concerns over Nvidia’s planned Arm purchase

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Tesla shares rev up on news of talks in India

Shares of the world’s biggest electric-vehicle (EV) maker Tesla surged 2.7% day-on-day to close at US$730.91 on Monday. Volume traded was about 18.6 million shares.

The price gains came despite GLJ Research analysts saying that Tesla was likely to miss its local China vehicle sales estimates.

Instead, stoking investor sentiment was a news report that the Nasdaq-listed company is currently seeking auto parts suppliers in India ahead of its entry into the country, one of the world’s biggest emerging car markets.

Out of 45 analysts, 22 recommended ‘buy’ on TSLA shares, 14 gave ‘hold’ calls, and nine suggested ‘sell’. Their average target price was US$679.97, Bloomberg data showed.

Last week, Cowen’s research team gave a ‘market perform’ call with a US$562 target price, DZ Bank recommended ‘buy’ with a US$790 target, while Morgan Stanley rated TSLA ‘overweight/in-line’ alongside a US$900 target.

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Tesla’s potential foray into India: What’s the latest?

On Monday, shares of Indian auto parts suppliers jumped as much as 13.7%. That came after The Economic Times newspaper reported on Sunday that Tesla was in early discussions with at least three local companies to source critical electrical, electronic, and mechanical components, as part of its plans to enter the South Asian country.

The California-based EV pioneer is in talks with the firms for the supply of parts such as instrument panels, windshields, brakes and power seats, the report added.

Indian companies already supplying components to Tesla were said to include Bharat Forge Ltd, Sona BLW Precision Forgings Ltd, and Sandhar Technologies Ltd.

Tesla intends to set up a factory to produce cars in India if it can first begin sales with imported vehicles. Its CEO Elon Musk has said several times on Twitter about the US company’s impending entry into India.

Reuters reported that Tesla registered a local company this January, and by April it had begun looking for locations to open showrooms in New Delhi, Mumbai and Bengaluru.

Elon Musk said to oppose Nvidia deal for UK chip maker

Separately, Musk has indicated competition concerns over US semiconductor giant Nvidia Corp’s planned takeover of British chip designer Arm Ltd, The Telegraph reported on Saturday, citing multiple sources.

The UK newspaper also said e-commerce behemoth Amazon.com Inc and South Korean smartphone maker Samsung Electronics Co Ltd have lodged opposition to the deal with US authorities.

Nvidia is likely to seek European Union antitrust approval for the acquisition in early September, Reuters said.

Tesla Stock: Waiting For Major Catalysts (NASDAQ:TSLA)

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