Elon Musk’s woes continue.
After losing $200 billion from his net worth last year, the Tesla CEO was met with the news that the EV company’s sales in China dropped off in December, The New York Times reported on Thursday. Tesla sold only about 56,000 cars in the country last month, down 21 percent from the year prior and a whopping 44 percent from November.
That’s a worrying sign for the company, given that China is the world’s largest car market, making up about 40 percent of Tesla’s sales. “When you are not active in the largest market in the world, you are nowhere,” Axel Schmidt, a senior managing director at Accenture overseeing the firm’s automotive division, said before the sales numbers were published.
Part of Tesla’s decline is due to local competition within China. Companies such as BYD, a domestic automaker and the country’s top EV brand, have been gaining market share. In December, BYD sales nearly doubled compared with the year prior, and they were up 2 percent from November, according to data from China’s Passenger Car Association cited in the Times. And while the government has promoted EV adoption among the populace, it has recently slashed subsidies that incentivized Chinese buyers to purchase a new EV. That has made carmakers, including Tesla, have to cut prices to compensate for the lack of state-backed stipend.
The worry is that these trends could hurt Tesla more broadly, not just in China. The company’s worsening performance in the country has affected its overall share price, which has fell sharply in the past year (with a decline of about 3 percent during Thursday trading). And with BYD and other Chinese car makers moving into the European market, Tesla could start to lose ground there as well.
It’s not all bad news, at least: In 2022, Tesla’s sales in China rose almost 50 percent overall. Still, that might not be enough to help the company overcome its more recent backslide. In addition to fewer sales, Tesla has also slashed prices for the models made at its Shanghai plant, and wait times for vehicles have shifted from months to as little as a week.
“The major worry now overhead for Tesla is that the demand story, especially out of China, is showing heavy cracks in the armor at a time that EV competition is steadily increasing,” Daniel Ives, an analyst at Wedbush Securities, said in a note to clients on Wednesday.
Musk sure can’t catch a break.
