JPMorgan pours cold water on the merger story; June is the strongest month in China; Europe's recovery broadens
On 8 Jul JPMorgan followed Morgan Stanley in weighing in on the merger story, but spelled out 3 hard obstacles: regulatory approval in China; unequal voting power (85% at SpaceX against 20% at Tesla); and the most likely structure, an all-stock acquisition of Tesla by SpaceX at a 20-30% premium.
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That bears out Jefferies' earlier worry that TSLA has become a proxy for SpaceX. In China, the Shanghai factory delivered 89,091 vehicles in June, the strongest month of the year, but that does not change the picture of BYD leading in pure-electric by 160,000 in Q2. Europe's recovery is broadening (Model Y topped the Swiss market in June, up 78.6% year on year), but the quality of gross margin still hinges on the 22 Jul results.
Analyst consensus
Consensus price target about $423 (implying a return of roughly zero); current price about $402
Key evidence
- JPMorgan (Rajat Gupta, Doug Anmuth), 8 Jul: a SpaceX-Tesla merger is strategically coherent on paper, but faces 3 hard obstacles. First, regulatory approval bottlenecks across several jurisdictions, especially China: Tesla's huge manufacturing and sales exposure there, plus Starlink still lacking Chinese approval, make a Chinese antitrust or national-security review highly likely. Second, unequal governance and voting power: Musk controls about 85% of the votes at SpaceX but holds only 20% of Tesla, so structurally it looks more like SpaceX taking over Tesla. Third, the most likely form is an all-stock deal, with SpaceX paying a 20-30% premium to the current price
- Key point: this directly bears out Jefferies' earlier worry that TSLA has become a SpaceX proxy. The hotter the merger story, the weaker Tesla's standalone valuation anchor. It also adds a real-world hurdle, Chinese approval, that RBC did not factor in when it raised its target to $500
- China: the Shanghai factory delivered 89,091 vehicles in June (including 52,920 sold locally), the best month this year. That puts hard numbers behind the China-recovery side of Q2's 480,126 global deliveries (+25% YoY). The 6-seat long-wheelbase Model Y L was the main driver, and is now being counted on to rescue the US market
- For contrast: BYD's 557,090 pure-electric vehicles in Q2 still lead the world, more than 160,000 ahead of Tesla. One better month in China is not the same as regaining share; local rivals are still eating into Tesla's position
- Reuters reported on 8 Jul that June registrations rose in several European countries, extending the recovery. In Switzerland, Model Y topped the market in June with 1,588 units (+78.6% YoY), the best in more than 2 years. After Japan (+183%, a record) and New Zealand, it is more evidence of small markets strengthening, further confirming how geographically broad the demand recovery is
- The old question: how much of the increase comes from inventory clearance and promotions. The quality of gross margin hinges on the 22 Jul results
Catalysts to watch
- 22 Jul Q2 results: gross margin is make-or-break
- Late July to early August: Optimus 3 production starts
Risks
- 85% of RBC's $500 target is premium resting on a SpaceX-Tesla merger that has not been announced and may not clear regulators; JPMorgan's analysis has laid that exposure bare
- The voting structure turns a merger into SpaceX buying Tesla at a premium, diluting Tesla's standalone valuation anchor
- A Chinese antitrust or national-security review is a new hard constraint (Starlink has not been approved, and Tesla's exposure in China is large)
- BYD led Tesla by more than 160,000 pure-electric vehicles in Q2, and local rivals are still eating into Tesla's share in China
- Strength in small European markets may be driven by inventory clearance and promotions, so the quality of gross margin is in doubt
Sources (4)
- JPM (Rajat Gupta/Doug Anmuth) 8 Jul
- Tesla China Q2 delivery data
- Reuters 8 Jul European registration data
- Swiss auto registry, June
A brief is a lead for our research, not a verified conclusion or advice.