New York CNN Business  — 

Tesla’s Chinese sales last month were much weaker than they originally appeared.

Although Tesla does not report monthly sales or regional revenue, the China Passenger Car Association earlier this week estimated Tesla’s Chinese sales were down 27% from March to just under 26,000 cars — much worse than the overall 10% decline in China’s electric vehicle sales overall.

But that’s not the full story: The trade group later clarified that its April figure includes sales of vehicles built in China but exported to other markets. More than half of the Teslas initially reported as Chinese sales — 14,174 — were exported.

That’s potentially a serious problem for Tesla, which opened its second auto assembly plant in Shanghai in late 2019 specifically to serve the crucial Chinese market. China is the world’s largest market for overall car sales, and electric vehicles make up a much bigger share of auto sales than in any other major market — about 4.5% in 2020, more than twice the EV share of the US car market last year.

Tesla’s sales to Chinese buyers plunged by more than 60% between March and April, according to independent Chinese EV analyst Zhu Yulong. Newly insured Tesla vehicles fell to just under 12,000 vehicles in April from about 34,500 in March, Yulong reported. Those numbers correspond closely to the CPCA’s non-export number in April, and total number in March.

Why Tesla sales are plummeting in China

Yulong believes that the drop in sales is due to bad publicity that Tesla has suffered in the Chinese market since the start of April.

Customers protested the company at China’s largest auto show in Shanghai last month, complaining about problems with their cars. The company also has five Chinese regulatory agencies investigating the quality of its Shanghai-made Model 3 cars. Chinese media also reported that China’s military had banned Tesla vehicles from entering its complexes, expressing concerns that onboard cameras could be used for spying — a charge Tesla CEO Elon Musk has denied.

“Tesla has suffered really strong negative coverage recently. It has damaged its sales,” Yulong wrote in a recent analysis.

Tesla critics in the United States were quick to point out that the weaker sales numbers represent a sign of trouble for the automaker’s bottom line.

“Keep in mind that the negative state-affiliated media campaign inside China around Tesla’s car quality didn’t begin until late April,” noted Gordon Johnson of GLJ Research, one of the harshest critics of Tesla. “So the impact (whatever that may be) likely won’t be seen until May/June 2021 sales figures are out.”

Tumbling shares

Tesla (TSLA) shares have been falling this week on worries about its Chinese sales, and on a report from Reuters earlier that Tesla (TSLA) has decided not to buy land next to its Shanghai plant for possible future expansion.

Shares fell 2% on Tuesday when the initial figures from CPCA suggested a 27% drop in Chinese sales, were down another 4% Wednesday and closed down 3% Thursday.

A spectacular 743% share price gain in 2020 made Tesla 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. Tesla shares have lost a third of their value through Wednesday’s close from their record high close in late January, sending the stock into bear market territory.