September 23, 2021

Tesla may be much worse off in China than anyone thought

Tesla’s Chinese sales last month were much weaker than they originally appeared.

Although Tesla does not report monthly sales or regional revenue, the China Passenger Car Association earlier this week estimated Tesla’s Chinese sales were down 27% from March to just under 26,000 cars — much worse than the overall 10% decline in China’s electric vehicle sales overall. But that’s not the full story: The trade group later clarified that its April figure includes sales of vehicles built in China but exported to other markets. More than half of the Teslas initially reported as Chinese sales — 14,174 — were exported.

That’s potentially a serious problem for Tesla, which opened its second auto assembly plant in Shanghai in late 2019 specifically to serve the crucial Chinese market. China is the world’s largest market for overall car sales, and electric vehicles make up a much bigger share of auto sales than in any other major market — about 4.5% in 2020, more than twice the EV share of the US car market last year. Tesla’s sales to Chinese buyers plunged by more than 60% between March and April, according to independent Chinese EV analyst Zhu Yulong. Newly insured Tesla vehicles fell to just under 12,000 vehicles in April from about 34,500 in March, Yulong reported. Those numbers correspond closely to the CPCA’s non-export number in April, and total number in March. Yulong believes that the drop in sales is due to bad publicity that Tesla has suffered in the Chinese market since the start of April.

Customers protested the company at China’s largest auto show in Shanghai last month, complaining about problems with their cars. The company also has five Chinese regulatory agencies investigating the quality of its Shanghai-made Model 3 cars. Chinese media also reported that China’s military had banned Tesla vehicles from entering its complexes, expressing concerns that onboard cameras could be used for spying — a charge Tesla CEO Elon Musk has denied. “Tesla has suffered really strong negative coverage recently. It has damaged its sales,” Yulong wrote in a recent analysis.