Sales Collapse: What Is Happening to Tesla in China?

Weeks go by and poor performances follow one after another for Tesla in China, with sales halved in six months.

Since the new car sales data is reported weekly in China, it is easy to track the evolution of each manufacturer. While BYD continues to impress, with more than 53,900 electric cars (+5%) sold each week, another manufacturer is causing concern: Tesla.

After a disastrous September, the momentum continues. During Week 41 (October 9-15), the American manufacturer, despite being produced in Shanghai, sold only 7,500 cars. In Week 34 (August 21-27), sales were 17,000 cars. In Weeks 26 (June 26 – July 3) and 11 (March 13-19), sales even exceeded 18,000 cars per week. This reflects a 2.5-fold decrease in sales.

Meanwhile, lesser-known Chinese manufacturers in Europe have continued to gain volume. Li Auto sold 10,500 cars (+52% in Week 41), GAC Aion 9,800, and Wuling 8,700 units.

This fragmentation of the customer base, attracted by more affordable electric vehicles, significantly disrupts the luxury strategy adopted by Tesla. It is also important not to underestimate the very severe financial crisis currently affecting China.

Of course, there is no real danger since global demand is only expected to grow, benefiting both Chinese manufacturers and Tesla. However, this position as a reference is gradually disappearing. And once again, it revives the debate on Tesla’s disruptive approach which, in the long run, could prove to be risky.

Tesla also seems to be paying for its policy of continuous price and specification changes, with customers fearing they might be taken advantage of. The Model 3 is not achieving strong sales, Tesla having already foolishly announced that prices would drop once the stocks of the old version are exhausted. The Model Y is also in a slump following the announcement of its upcoming upgrade in the Chinese market, with increased power and range. Here too, customers are delaying their purchases. Lastly, Model S and X are no longer considered with insignificant sales. As for the Cybertruck, it will not meet any local needs, just like in Europe, except for a few eccentric buyers seeking visibility.

Undesirable prospects, yet Tesla’s stock is still rising.

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