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Tesla sales in China take a hit as Covid Lockdown continues

Tesla sales in China take a hit as Covid Lockdown continues

Tesla’s Elon Musk last month tried to downplay concerns about the electric car maker’s operations in China after a three-week shutdown of its Shanghai factory, but that country’s lockdowns and severe restrictions to contain Covid-19 , have the company’s production and sales in April and the impact could last through the month.

Tesla sold just 1,512 battery-powered Model 3s and Ys in April, down 98% from 65,814 in March. China Passenger Car Association said this week. It was the company’s lowest sales volume in China since April 2020, shortly after the Shanghai Gigafactory began production of cars. Reuters† Tesla’s decline was much larger than the overall decline in new passenger car sales in China, which fell 34% from March and 36% from April 2021.

“The epidemic spread to 29 counties and cities across the country in April,” the industry association said in a statement. “In April, the entire city of Shanghai was silent, affecting the supply and logistics of parts and components in the Yangtze River Delta and beyond, highlighting Shanghai’s status as a hub in the national auto industry.”

China has supported Tesla’s profitability over the past year as the country’s demand for electric vehicles, coupled with lower parts and labor costs, quickly made the Shanghai plant the main production source in 2021, less than two years after it opened. . During the company’s call on its first quarter results, when it posted record profits and vehicle deliveries, Musk said that despite last month’s close, the company could still make up for production losses in China in the second quarter.

“Giga Shanghai is coming back with a vengeance,” the company’s billionaire CEO said during the April 20 earnings call. “Despite new issues emerging, I think we will see record weekly output from Giga Shanghai this quarter, although we are missing a few weeks.”

Production at the Shanghai plant resumed in late April, initially with workers living in the plant around the clock, although production does not appear to be back to normal. A complicating factor is a shortage of parts, according to Reuters

“For Tesla, automakers in general and industries across the board, it’s easier to get their own factories working and their people back to work,” said Michael Dunne, an experienced specialist in China’s automotive industry. industry. Forbes last month. “The really big and hard-to-remove obstacles remain the suppliers in those factories.”

Giga Shanghai, which suspended operations from March 28 to April 17, was Tesla’s main production source for the first time in 2021. 473,078 vehicles compared to 462,949 produced at the Fremont, California plant. The company recently opened factories in Berlin and Austin that will help solve Tesla’s challenges in China even as Covid restrictions persist.

“China is clearly a very important market, but it’s probably 25% to 30% of our market in the long run,” Musk told the Financial Times at the Future of the Car conference on Tuesday. Currently, China is “kind of a hiccup with the Covid restrictions in Shanghai.”

Tesla fell 8.3% to $734 in Nasdaq trading Wednesday. The stock has fallen 39% this year.