Tesla Stock Rises on China Car Mandate

The electric car maker's stock climbed after officials in China say they will pass clean car mandate.
8:01 | 07/14/14

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Transcript for Tesla Stock Rises on China Car Mandate
I'm Dan and Wendy York and as a financial market the vote. This Monday July 14 story stock. Tesla stock. Is on fire climbing over 4% today investors seize new opportunities -- electric carmaker after officials in China. And in Pennsylvania say they are pushing legislation that will benefit the company. So for little more context -- that ordering and Rick Newman from Yahoo! finance. Rick all over the story on this on the street has been relatively negative in the short term on this stock in the past couple weeks. So want to talk about a little bit about the major catalyst that is driving this stock today what's going on. Two things today again. We heard out of China that there's a new government mandate this was a new -- passed over the weekend 30% of the cars -- by the government must be electric vehicles. Now that doesn't mean that there's a mandate for the Chinese Government to -- tassel was. But that just happens to coincide with has those entry into China they're they're very being very well received over there are a lot of people -- in the car -- -- so. If we've got some of the ministers or the deputy minister's interest in getting an electric -- -- was a good choice second. Has -- apparently won its battle in the state of Pennsylvania to. Bypassed traditional dealerships and opened five. Corporate stores there this has been -- problem in some states so they'll be able to sell without any problem in Pennsylvania apparently. And their minutes -- several other states -- have been kind of following the same path. So you got the opportunity innocent Pennsylvania as well clearly for those -- but then also the big market of course it was trying to get -- -- is that Chinese economy. And other were seen that I'm that you put up about that is not a requirement to purchase that tests -- but the same timed out. Just that expands -- -- industry obviously is an advancement for company -- test that they'll take advantage -- now ABC news spoke with an analyst from stock -- In that there the Twitter for traders that they monitor what stock traders are tweeting about stock which analysts -- Crosby -- telling us. The traders are not talking about more upside protest lessons that mandate by the Chinese. But still many investors -- to see how these announcements will affect Apple's top line first before buying and it was in fact said. That sentiment still remain significantly down. Compared to last -- highs and other words he's saying that traders are still cautious despite those developments both from Pennsylvania from China. Do you agree -- -- Smart growth. We'll put this like Tesla is a risky stock it's have been a volatile stock to heavily. Traded stock there's tons of interest -- it mean Tel plus one of these darling companies. That is trying to kind of do everything different ending in out. An old industry that's been doing everything the same for a hundred years so they're trying to disrupt the auto industry everywhere. -- so far they've been doing it but that doesn't mean they'll continue to do in the future. And the risk for Tesla and this is this is what I think you know traders worry about. Is that from the stock we'll get run up by people trying to lock in the profits and you know -- still a small company and it could suffer reversals based on a single event so we could hear from something from China that may be. Some arbitrary decision that they must be Chinese made electric cars for instance and I would have -- very negative effect on publicist -- the remains very sensitive. Two single events just because of its size but it's still very exciting stock. Let's talk about the movement still legislatively that's happened in Pennsylvania how many jobs are we estimated anywhere from -- five dealerships opening up. -- think of these these will be -- sort of like dealerships I mean they're just not gonna be controlled by. A local family or something like that they're going to be controlled by catalyst although we sort of like dealerships I don't think it's a ton of jobs maybe -- -- -- -- hundred or so. And at the same time I mean tell who's competing. With other dealerships. Episode other dealerships might lose a few jobs. Because more people what will have an opportunity to buy -- -- so I don't think. I don't think it's a big job creating opportunity there what I think is. -- -- a lot of states are getting criticized for. Clinging to this -- -- -- model that really in to any case a lot of dealer's dealership groups just have they're very politically connected. And it makes these state legislatures look as if they're just still stuck in the 1960s so I think some of these state. States are starting to feel embarrassed like we look we look like we're living in the -- -- with -- hearing here. And we need to get with it because people like this kind of technology. They like that they let this kind of technology such as Italy ran it's my next question because I'm harking back to 1990 when California's. Had passed legislation requiring a certain amount of cars on the road to be electorate and of course General Motors came out with a EV -- Also the same years the Hummer which seemed like a bit of it interesting dichotomy there but we right now -- Has consumer appetite change that means it's clearly that there's been some time passed since then. But our buyers out there right now. That's the problem the Tesla faces so. Consumer -- -- appetites have changed a little bit but it's important to keep in mind that electric vehicles such as those made -- has -- pure electric someone's yet to charge through an outlet. Weighed less than 1% of the US market right now. And that's not good enough for Tesla so Tesla says trust us we're gonna -- we're -- expand the whole market. You know the test was vehicles up till now have all been very expensive luxury vehicles and only a few people can buy anyway. So -- -- successful. Selling this car to wealthy people who want something you know that what it remains to be seen if -- if -- has level be able to expand as it says it well. Build electric cars that are closer to 40000 dollars get more buyers and they get more people -- -- in this and that's a very very much an open question. It's -- well it's a very basic question now and a follow up with this but what does happen if in fact you run out of juice on the highway with these -- Well that's what a lot of people wonder that's called range anxiety you you just worry that you're not humiliate we are going. First of all these cars have tons of warnings and alerts if -- getting low on energy on energy. There's no way you can not notice the way you may be just don't notice that your gas -- is going down -- you don't hear that you know there's no bells going off everywhere. These cars let you know when when you're getting close and they give you could make sure you have time to get to a -- in place. I'm sure it will happen especially if these cars become more widespread they're going to be. We're gonna hear about incidents people just for whatever reason. They get stuck -- -- -- guys somewhere out on I seventy and I don't know what to do I mean you gotta get tell you -- You gotta get to a charging station that's when it comes down to its kind of the same as running out of gas. Raising all the questions and logistics about the infrastructure needed that but -- after put it but. So the number one trading electric car stock on stock -- date is is -- technologies group and tell me about candy. It's -- it's a company I don't even know very much about the reason it's so popular is because it's a Chinese. Electric car company so. China is their home market and their I think the reason that stock is suddenly so -- is that. It's in a direct positioned to benefit from this new -- in China about sales of electric cars. And Chinese companies have a lot more support from the Chinese Government that -- those companies to succeed I mean they the Chinese Government subsidizes. In many ways companies they're making electric cars the batteries that go in those cars that is an industry that China. Wants to be a leader in the future so -- in China's interest to support companies like candy. And obviously that's great news for -- however any time you buy sort of an unknown Chinese stock you are running the risk. Of us you're speculating at -- high risk investment and you don't know what's gonna happen in China they don't have. -- markets don't function with the same transparency are still. Well have to wait and see candy and -- -- both charged up. For their stock investors today -- -- -- from Yahoo! finance on this Monday Rick thank you so much I was appreciate it and to. You've been watching stores -- stay with abcnews.com related headlines Dan.

This transcript has been automatically generated and may not be 100% accurate.

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