Tesla’s sales in China, the world’s largest auto market, rose in 2022, but declined in December as domestic manufacturers developed, according to data released on Thursday.
The company sold about 56,000 vehicles in China last month, down more than 20% year-on-year and nearly 45% month-on-month. According to data released by foreign media, for the whole year, Tesla’s sales in China have increased by 50%. China Passenger Car Association.
China accounts for about 40% of Tesla’s sales. Concerns about the automaker’s performance have been a big factor in Tesla’s stock price plunge. Shares of the company were down about 5% on Thursday morning.
Tesla is facing increasing competition from Chinese automakers such as BYD, which sells well-regarded vehicles at lower prices and is the No. 1 electric car brand.
China is seen as key to Tesla’s global ambitions. Overall car sales are still on the rise compared to the U.S. and Europe because many people don’t own a car, or only have one. Despite recent cuts to subsidies, the Chinese government has made a big push to own electric vehicles as a solution to urban air pollution.
“If you’re not active in the world’s largest market, you’re going nowhere,” said Axel Schmidt, a senior managing director at Accenture who heads the consultancy’s automotive division, before releasing the sales figures.
Tesla’s factory in Shanghai, considered one of the company’s most efficient, supplies vehicles to Europe and other parts of Asia in addition to China. The plant has been forced to close several times during 2022 due to supply chain issues and pandemic lockdowns.
There are also signs that Tesla is suffering from weak Chinese demand for its products. The company has lowered the price of the vehicles and advertises on its website that the vehicles can be delivered in as little as a week, compared with the months-long wait last year.
Tesla Chief Executive Elon Musk has courted the Chinese government, such as suggesting that Taiwan become a special administrative region of China as a way to cede more control to Beijing. Still, analysts say Tesla could be vulnerable to political tensions between the U.S. and China.
“The main concern for Tesla now is that the demand story, especially from China, is showing signs of weakness at a time when EV competition is steadily increasing,” Daniel Ives, an analyst at Wedbush Securities, said in a note to clients. Significant cracks in the armor,” said Wednesday.