Tesla’s recent run of bad publicity in China is apparently hurting its sales there, raising investor concerns.
The electric car leader sold fewer than 26,000 cars in China in April, down 27% from March, according to figures released by the China Passenger Car Association. The drop came as Chinese electric vehicle manufacturers such as Nio (NIO), Xpeng, and Li Auto, all reported improved domestic sales.
Tesla made up 17% of overall electric car sales in April, down from 21% in March, according to the association.
The company was the target of a protest at China’s largest auto show in Shanghai last month by Tesla owners who complained about problems with their cars. The company also has five Chinese regulatory agencies questioning the quality of its Shanghai-made Model 3 cars. And there were reports that China’s military had banned Tesla vehicles from entering its complexes, expressing concerns that cameras equipped onboard could be used for spying, a charge Tesla CEO Elon Musk denied.
“It was expected that its April sales would be down sequentially, but not to this extent,” said Dan Ives, a tech analysts at Wedbush Securities. “China is a lynchpin to the Telsa bull story. The sales numbers show that all the issues in April had an impact.”
Also hurting share prices Tuesday is a story from Reuters that Tesla has halted plans to buy land to expand its Shanghai plant into a global export hub due to uncertainty over U.S.-China trade tensions. The report cited unnamed sources familiar with the company’s thinking.
Tesla did not respond to a request for comment on either its April sales in China or its Shanghai plant plans. The company reports its global sales quarterly, not in particular markets or for particular months. Reuters reported that Tesla told it that the Shanghai factory is “developing as planned.”
The Chinese sales news and the Reuters report helped send Tesla shares down 2% on Tuesday.
A spectacular 743% share price gain in 2020 lifted Tesla to one of the most valuable US companies of any kind and by far the world’s most valuable automaker, worth as much as the six largest automakers combined.
But after continuing that run in the first few weeks of 2021, shares topped out in late January after the company reported slightly disappointing fourth quarter earnings. The slide has taken Tesla shares down 29% from their peak, even before Tuesday’s slide, sending the stock into bear market territory.