Slowing China shipments and additional price cuts threaten Tesla (TSLA) in the world's largest vehicle market, sending shares to multi-week lows.
Initial data from China's PCA (Passenger Car Association) via Bloomberg shows 60,365 Tesla Giga Shanghai vehicle shipments in February. February shipments fell 16% from a month earlier, 19% from a year earlier, and to their lowest level since December 2022.
This year, the Chinese Lunar Holiday shut down the country for over two weeks in February. This has historically slowed economic activity and sales. Tesla also fulfills exports outside China earlier in the quarter and increases them for China domestic sales later.
Tesla's lowest shipping total in almost a year worries the company, which sees China as a huge growth area. Even BYD, which surpassed Tesla in Q4 and dominates the Chinese EV market, saw its February sales plummet 37% to 122,311 units from 193,655.
China sells the most EVs, but a recent dip in demand has led automakers there to engage in another price battle earlier this year, including Tesla.
Deutsche Bank's Emmanuel Rosner reported on Monday that Tesla's mainland incentives include a ~$4.8K price decrease for consumers who buy Model 3 and Model Y vehicles from existing stocks by March's end. Rosner said the new incentives include insurance discounts, paint discounts, and Model Y finance favored programs.
Tesla dropped Model 3 and Model Y prices by 5.9% and 2.8% in January, respectively, before the current discounts. China's EV market is competitive, therefore Tesla cutting pricing and perhaps reducing shipments worries investors. At least BYD won't threaten Tesla's US home market yet.
Stella Li, BYD Americas CEO and executive vice president, told Yahoo Finance Live, “We're not planning to come to the US.” “It’s an interesting market, but it is very complicated,” she said, noting political pressure on Chinese corporations and stalling EV uptake.
BYD was apparently going to use Mexico-based manufacturing to bring EVs into the US without a tariff penalty under the US-Mexico-Canada Agreement, raising concerns about its entry.
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