Tesla (TSLA-US) shares bounced back sharply on Monday, rising 5.4% to $435.90, after sliding more than 5% the previous session. The rebound came even as renewed U.S.-China trade tensions rattled markets, underscoring the electric vehicle maker’s resilience and the market’s faith in its long-term growth story.
Shanghai Gigafactory Ramps Up
One factor behind the rally: Tesla’s Shanghai Gigafactory is stepping up production in the fourth quarter to meet rising demand across China and the Asia-Pacific region. The company’s Global Vice President, Tao Lin, confirmed the ramp-up on social media, signaling confidence in Tesla’s ability to maintain momentum despite geopolitical headwinds.
Tesla’s China-made sales rose 2.8% year-over-year in September, breaking a two-month streak of declines. The company also began deliveries of its new six-seater model, adding fresh fuel to its product lineup in the world’s largest EV market.
Analyst Endorsement Adds Tailwind
Adding to the positive sentiment, Melius Research analyst Rob Wertheimer initiated coverage of Tesla with a "buy" rating and a $520 price target. He argued that Tesla is a "must-own stock," citing the disruptive potential of artificial intelligence (AI) in reshaping trillion-dollar industries, with autos at the forefront.
Wertheimer highlighted Tesla’s edge in combining AI applications with design and manufacturing, particularly in self-driving technology. He suggested that autonomous taxis could eventually replace second cars in households, a shift that would position Tesla as a leader in both mobility and AI-driven innovation.
AI and Self-Driving Ambitions
Tesla continues to invest heavily in AI computing to train its vehicles for self-driving and robotic operations. The company launched its AI-powered self-driving taxi service in Austin, Texas, earlier this year and plans to expand nationwide. This push reinforces Tesla’s positioning not just as an automaker, but as a technology company with ambitions that extend well beyond cars.
Trade Tensions and Market Sentiment
The rebound came against a backdrop of heightened U.S.-China trade tensions. China has threatened to restrict exports of rare earth minerals, while President Donald Trump warned of new tariffs on Chinese goods. Yet Trump’s reassurance on Truth Social—"Don’t worry about China, everything will be fine"—helped calm investor nerves, at least temporarily.
Tesla’s reliance on Chinese imports is limited, but its Shanghai plant remains a critical production hub. In the first half of 2025, Tesla sold about 263,000 EVs in China, nearly 40% of its global sales. That exposure makes the company sensitive to trade headlines, even as its fundamentals remain strong.
Valuation and Expectations
Tesla’s stock has gained 90% over the past 12 months, though only about 2% year-to-date. Its price-to-earnings ratio now stands at roughly 165 times next year’s estimated earnings, up from 70 a year ago. The lofty multiple reflects investors’ high expectations for Tesla’s AI-driven growth potential and its ability to maintain leadership in the EV market.
The Bottom Line
Tesla’s rebound highlights the market’s willingness to look past short-term trade jitters and focus on the company’s production strength, AI ambitions, and long-term growth story. With Shanghai ramping up, analysts turning bullish, and self-driving taxis moving from concept to reality, Tesla remains one of the most closely watched—and hotly debated—stocks on Wall Street.