Higher U.S. EV Sales To Drive Tesla Stock

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Tesla (NASDAQ:TSLA) shares have rallied more than 10% over the past five days after a bullish report about the state of the EV industry in 2016 emerged. According to InsideEVs.com, plug-in sales in the U.S. during the first two months of the year were up 8.9% to 14,172 units compared to the same period a year ago. 2015 was a bad year for the EV industry with many manufacturers recording double-digit sales declines. EV sales were almost flat in January 2015 and declined year-over-year during the month of February.

Hybrid sales, however, declined 13% to 45,338 units. The entire auto industry in the U.S. seems to be doing well with sales during the first two months of the year climbing 3.5% Y/Y to 2.492M vehicles. This trend of falling hybrid sales appears to vindicate Tesla CEO Elon Musk who has always insisted that pure electric cars and not hybrids are the future of the industry. Traditional automakers have mostly favored the hybrid approach.

Tesla 5-Day Share Returns

Source: CNN Money

InsideEVs.com estimates that Tesla sold 2,400 Model S units during the first two months of 2016 compared to 2,150 units during the same period last year. Meanwhile, the site estimates that Tesla sold 770 Model X units during the first two months of the year making it the 6^th best-selling EV Model in the country. The combined sales of Model S and Model X means that Tesla’s sales for the first two months are 47.4% higher compared to 2016. In real dollar terms, however, Tesla is estimated to have realized revenue ~55% higher for the period since Model X sports an Average Selling Price (ASP) about $10k higher than Model S.

2015 was the first year when the EV industry recorded year-over-year sales declines. Low oil prices were to blame as they acted as a disincentive for people to switch to alternative fuels. But oil prices have seen a sustained rally with Brent Crude having recently crossed the $40/barrel mark for the first time in three months. The rally is being fuelled by optimism after 15 major oil producers agreed to meet in Doha in about a month’s time to discuss the possibility of freezing supplies around January 2016 levels.