The stock prices of Tesla continue to deplete, and had sustained another 5% drop on the 3rd, which is largely associated with the sales reduction in China.
The foreign media believes that one of the reasons for the loss of confidence among investors may be related to the poor performance of Tesla in the Chinese market.
The Information published an article of “Inside Information” on the 3rd, which claims that the sales of Tesla in the Chinese market are expected to be cut in half during May.
The article pointed out that the sales of Model Y in the Chinese market have been surging since January, followed by a predicament after March, where the sales volume of 21K units had fallen to 18K units in April, and are expected to be merely 9,800 units in May.
Tesla stock prices dropped for 5% on the 3rd（Source：Tradingview）
Is it a sales crisis, marketing crisis, or political crisis that Tesla is facing in China? We must first understand that the delivery volume of the company varies significantly each month. Take Europe as an example; Tesla delivered less than 2,000 units in January, followed by 5,000 units in February, before the number surged up to 20K units in March. It is actually risky determining the market alterations of Tesla on a monthly basis.
A similar situation is also seen in Taiwan. Tesla had delivered zero vehicles in April, and almost 1,000 units in May. Could this mean a surge of 1,000 times in sales? The deviation is actually caused by the sailing schedule, which is not only seen in Tesla, though the lesser inventory of the company has created a more prominent deviation. An observation on the sales statistics based on a quarterly basis usually provides better understanding and definition.
This particular issue has a different meaning going back to the Chinese market, as Giga Shanghai has been delivering a stable amount of vehicles since the initiation of mass production in 2020, and the company has been selling no less than 10K units each month ever since May 2020. If this “internally leaked information” is real, a sales of below 10K units is indeed a warning sign.
Tesla started selling Model Y in Chinese New Year this year, and reduced on the selling price at the same time to stimulate purchases. Despite an increase in sales volume, a woman who believed that the brake of Tesla has severe issues at the Auto Shanghai had derived a huge aftershock. Although the data shows that the brake of Tesla is relatively reliable, the pressure coming from both the government and the media have forced Tesla China to yield.
The entanglement between Tesla and the Chinese government is further explained in our previous coverage of “Besieged and Blockaded - How Did Tesla Piss Off China?”.
The Chinese market accounts for 1/3 of the global sales for Tesla, and is also the country with the largest sales volume in electric vehicles, though an inflow of the sweet renminbi, even for someone as powerful as Musk, will require compromises in certain segments.
(Cover photo source: Tesla)