Tesla, Apple to source growth from increasing reliance on China: analysts

Tesla, Apple to source growth from increasing reliance on China: analysts

Fourth-quarter results from US electric car producer Tesla and US technology giant Apple, due out on Wednesday US time, are likely to show their increasing reliance on China, a pivotal market for both, Chinese industry watchers said.

The successes of these two companies in China can be seen as a proxy for US businesses that are truly committed to the Chinese market, analysts said, and their growth trajectories would continue.

Tesla, arguably one of the brightest stars in the US stock market after its shares skyrocketed 743.4 percent last year, is expected to release its fourth-quarter results after the bell on Wednesday.

Estimize, a crowdsourced financial estimates platform, estimated an adjusted profit of $1.02 a share for the fourth quarter, compared with 43 cents a year earlier.

It would be the carmaker’s sixth straight quarterly adjusted earnings, according to media reports.

Tesla delivered 499,550 vehicles last year, it revealed earlier in January, just under its pre-COVID-19 goal of delivering more than a half million cars.

A deliveries guidance for this year is expected to come in at more than 800,000 vehicles, media reports said.

There are concerns over whether Tesla’s production can keep up with its sales goals, Zeng Zhiling, managing director of LMC Automotive Consulting in Shanghai, told the Global Times on Tuesday.

Tesla’s Shanghai Gigafactory will likely take on a more prominent role in Tesla’s manufacturing plans, Zeng said, citing lackluster process on its European plant amid environmental woes.

“The European market, which has an array of viable electric car brands, is hardly a place for Tesla to exercise its magic power,” he commented.

The Shanghai factory contributed about one-third of Tesla’s global production capacity throughout 2020, according to Zeng, who said China would increasingly be a market to rely on for the US electric carmaker.

China is one of the world’s most open car markets and almost all notable international car groups have set up joint ventures in the country and reaped good returns, Huang Libin, spokesperson of the Ministry of Industry and Information Technology (MIIT) and director general of MIIT’s Performance Inspection and Coordination Bureau, told a press conference on Tuesday.

Along with an accelerated transition to electric vehicles globally, noted international automakers are putting more emphasis on China. They’re effectively upgrading the country’s supporting industry chains, fostering technology advances, and boosting employment and economic growth, Huang said.

Apple is scheduled to release fourth-quarter results on Wednesday, and there have been market estimates that the iPhone maker will report record quarterly revenue, fueled by strong gadget sales amid remote work and school trends.

A bull on Apple’s China market performance this year, notably in smartphones, Ma Jihua, a veteran industry analyst, told the Global Times on Tuesday that Apple’s 5G phones are likely to be more alluring to Chinese consumers as 5G handsets from other vendors are generally priced in the higher-end range, thereby reducing the price gap between iPhones and other smartphones.

With 5G phones accounting for the lion’s share of China’s phone market, this would point to continued strength for Apple, although the country’s smartphone shipments are in decline.

Photo taken on Oct. 19, 2020 shows the Tesla China-made Model 3 vehicles which will be exported to Europe at Waigaoqiao port in Shanghai, east China, Oct. 19, 2020. U.S. carmaker Tesla announced on Monday that it would export the made-in-China Model 3 to Europe, marking another important milestone for its Shanghai Gigafactory. The first batch of exported sedans will leave Shanghai next Tuesday and arrive at the port of Zeebrugge in Belgium at the end of November before being sold in European countries, including Germany, France, Italy, Spain, Portugal, and Switzerland. (Xinhua/Wang Xiang)

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