CNN is reporting that electric car Tesla’s China sales in April were much weaker than originally expected.
Tesla does not release monthly sales or regional revenues to the public, however, according to estimates from the China Passenger Vehicle Association earlier this week, Tesla’s China sales were down 27 percent from March, with less than 26,000 units sold in April, shrinking more than twice as fast as the rate of decline in overall electric vehicle sales in China (10 percent).
To make matters worse, the April sales figures include not only sales in China, but also sales of vehicles manufactured in China and exported to other markets. Of the 26,000 Tesla vehicles initially reported as sold in China, more than half (14,174) were exported.
This could be a serious problem for Tesla as the company opens a second car assembly plant in Shanghai at the end of 2019, specifically to serve the key Chinese market.
China is the world’s largest market for car sales and has a higher share of electric vehicles in auto sales than any other major market – about 4.5 percent in 2020 – more than twice the share of electric vehicles in the U.S. auto market last year.
CNN reported Friday (May 14) that independent Chinese electric vehicle analyst Zhu Yulong said sales to Chinese buyers of Tesla plunged more than 60 percent between March and April; newly insured Tesla vehicles fell from about 34,500 in March to less than 12,000 in April. These numbers match the non-export numbers reported by the China Passenger Vehicle Association for April and the March total.
Zhu Yulong believes that the decline in Tesla’s sales in China is related to the very strong negative press it has been receiving in the Chinese market since April.
At the Shanghai Auto Show, a Tesla customer, unhappy with the way complaints about brake failure were handled, climbed on top of a show car in protest and was subsequently taken away by police, sparking widespread public concern.
Reuters reports that Tesla is being attacked by the Chinese media and held accountable by regulators, showing that big foreign brands are not safe in China and that the company’s handling of an incident could turn into a crisis if the tightly controlled Chinese (Communist Party of China) media gets their hands dirty.
Five Chinese Communist Party regulators are already investigating whether there are quality problems with Tesla’s Shanghai-made Model 3 cars. Tesla owners have complained on Chinese social media microblogs that the vehicles would suddenly accelerate or fail to steer, among other quality issues, and criticized Tesla’s local team for failing to pay attention to, and to fix, the problems.
Earlier, the Chinese Communist Party’s military banned Tesla cars from military barracks and family compounds, citing security concerns about the vehicles’ cameras. Tesla CEO Musk denies the allegation.
Tesla’s shares have been falling this week on concerns about its China sales and an earlier report by Reuters that Tesla had decided not to buy land next to its Shanghai plant for a possible future expansion.
By the close of trading on Wednesday (May 12), Tesla shares had fallen by a third from their all-time high closing price in late January, sending the stock into bear market territory.
Tesla had posted a stunning 743 percent stock price gain in 2020, making it one of the most valuable companies in the U.S. and by far the most valuable automaker in the world, worth as much as the six largest carmakers combined.