Tesla sales in China fall 98% as lockdowns take their toll

The electric vehicle maker sold 1,512 vehicles in mainland China last month, down 98% from March, according to data from the China Passenger Car Association. Tesla production in the country also fell 81% to 10,757 vehicles in April from 55,462 in March.

Tesla exported no Shanghai-made vehicles in April, compared to 60 exported in March.

The plunge comes as tens of millions of people in at least 31 cities have been in lockdown for weeks, causing massive supply chain disruptions and hurting consumer spending in the world’s second-largest economy.

It’s a sharp turn for Tesla after a strong start to the year in mainland China. Tesla was the country’s top seller of electric vehicles in March, delivering 65,184 cars from its Shanghai factory. That number was up 15% from February as consumer demand for electric vehicles remains strong even during the pandemic.

Last year, Tesla’s “Gigafactory” in Shanghai exported 484,130 cars, nearly half of the company’s 936,000 global deliveries.

But its production and sales were hit hard in April, when the government shut down Shanghai and many other cities to control the spread of the virus.
Tesla’s Gigafactory was shut down for weeks last month and only recently managed to restart production. But he seems to have encountered another problem.
On Tuesday, Reuters reported, citing unidentified sources, that Tesla had halted most production again due to issues with suppliers. The company did not respond to a request for comment.

Tesla CEO Elon Musk tried to downplay concerns about lockdowns in China.

“I’ve had conversations with the Chinese government over the past few days and it’s clear the lockdowns are being lifted quickly,” Musk said Tuesday at a virtual car conference hosted by the Financial Times.

“So I wouldn’t expect it to be a significant issue in the coming weeks,” he said.

The impact of Shanghai

Not everyone shares Musk’s optimism. Shanghai has been in lockdown since late March, and it’s unclear when the restrictions will be fully lifted.

City authorities further tightened restrictions over the weekend, after President Xi Jinping pledged to “without hesitation” double down on the zero-Covid policy.

Other automakers also reported a sharp slowdown in sales and production last month.

Toyota (MT) announced on Tuesday that it had suspended operations of 14 production lines at eight factories in Japan from May 16 to May 21 due to parts shortages resulting from the Shanghai lockdown.

The company’s global production would be cut by 50,000 units for May because of this, he added.

“Semiconductor shortages, the spread of COVID-19, and other factors make it difficult to forecast several months ahead.”

Another Japanese automaker, Nissan engine (NSANY)announced on Monday that its sales in China were down 46% in April compared to a year ago.

“We witnessed a continued impact on vehicle production and sales in April due to continued semiconductor shortages, supply chain disruptions and lockdown in key regions and cities due to the spread of COVID-19,” said Shohei Yamazaki, Nissan’s senior vice president and president. of the company’s management committee for China.

Overall passenger car sales in China fell 34% in April from March, the steepest decline on record, the China Passenger Car Association said.

“While the values ​​of Chinese ADRs and the domestic stock market have both fallen and the service sector remains sluggish, people’s incomes have plummeted during the pandemic,” the association said. ADRs are securities issued by Chinese companies listed in the United States.

“Buying power in the car market has been damaged and consumers’ willingness to buy a car has plummeted,” he said.

The industry group also acknowledged there had been a “significant impact” on supply chains from the lockdowns in Shanghai and Changchun, as the two cities are major manufacturing bases for key parts of the automobile industry.

In Shanghai, five major automakers recorded an average drop of 75% in production in April compared to the previous month. In northeast Changchun, major automakers saw their output drop 54% over the same period.

On Wednesday, separate data from the China Association of Automobile Manufacturers, another major industry association, showed the country’s overall car sales fell 46% in April from March, to 1.2 million vehicles. This is the lowest April figure in a decade.

Electric vehicles

But the association expects demand to pick up in May as the peak of the Covid outbreak has passed and supply chains gradually return to normal.

Retail sales of new energy vehicles – which include electric vehicles and plug-in hybrids – fell 37% from March, “unlike any other April in history,” the agency said. ACIPR. But demand is expected to increase again and remain strong in the short term.

“In the current environment, self-driving travel has become the first choice. Affected by high oil prices, more people will choose to purchase new energy vehicles,” the association said, adding that vehicle sales electricity would rebound strongly this month from April. .

—CNN’s Tokyo bureau and Kathleen Benoza contributed to this report.

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