Tesla’s stock plummeted by more than 7 percent on Monday, triggered by reports of dwindling sales in China for February. This decline in its primary market has raised concerns about Tesla’s global delivery prospects, particularly amidst growing challenges such as waning demand and intensified competition.
The Lunar New Year festivities in China likely contributed to the sales slump in February, impacting car purchasing activities in the region. Sales of Tesla’s China-made vehicles experienced a notable drop of 19 percent compared to the same period last year.
Data from the China Passenger Car Association disclosed that Tesla sold 60,365 vehicles during the month, marking the lowest volume since December 2022. The Tesla Shanghai factory, responsible for manufacturing Model Y and Model 3 electric cars for the local market, Europe, and other countries, accounted for more than half of Tesla’s global deliveries last year.
The decline in Tesla’s sales in China has sparked concerns among investors and analysts, particularly regarding the company’s ability to maintain its global delivery momentum. Wedbush analyst Dan Ives characterized the situation as a “perfect storm of headwinds” for Tesla in China, noting its adverse effect on the company’s stock performance.
In response to the challenging market conditions, Tesla has implemented various measures, including price cuts and incentives, to stimulate demand and counter competition from Chinese rivals like BYD. Tesla unveiled additional incentives this week, such as insurance reimbursements, to attract customers in the world’s largest car market.
However, the competitive landscape in China has intensified, with BYD launching a new version of its best-selling car at a lower price than its predecessor. This move has sparked a price war among EV manufacturers, complicating Tesla’s efforts to regain momentum in the region. BYD also reported a significant sales decline, down 37 percent from the previous year.
In the United States, Tesla has introduced several incentives to boost sales, including offering 5,000 free Supercharging miles to customers who trade in their older vehicles for a new Tesla vehicle by March 31. Additionally, Tesla temporarily reduced prices for some of its Model Y cars in February.
Analyst Troy Teslike adjusted his forecast for Tesla’s global deliveries for the first quarter of this year, citing weaker-than-expected sales in China despite price cuts as indicative of “a demand problem.” Tesla had previously cautioned of “notably lower” sales growth for the year ahead as it concentrates on ramping up production of its more affordable electric vehicles.
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