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Tesla shares fall after sales record in China, reports of production cuts

Tesla (TSLA) sold a record number of Chinese-made vehicles in November, according to data released by the EV giant on Monday. However, multiple reports on Monday said Tesla is also planning to cut its EV production in China, as demand appears to be faltering. Tesla shares fell on Monday.


The EV giant on Monday refuted the reports, calling claims that it was cutting production in China untrue.

The US-based global electric car company sold 100,291 Chinese-made electric vehicles in November. That represents an increase of around 90% compared to last year and a gain of 40% compared to the 71,704 Tesla electric cars sold in October.

Between January 2022 and November 2022, Tesla has sold 655,069 Chinese-made cars, a 63% year-over-year increase.

Despite those increases, however, reports emerged Monday that Tesla will cut production at its Shanghai plant by up to 20% as soon as this week.

The outlook for demand in China has become less clear, even with a price cut in late October and various other incentives, as the company ramps up output to record levels. Tesla also exports a large number of Chinese-made electric cars, which are produced at the factory in Shanghai. 71,704 Tesla Shanghai EVs were sold in October, with 54,504 exported and 17,200 vehicles delivered in China.

Tesla’s Shanghai plant had upgrades this summer that were expected to increase production capacity to around 1 million units annually. However, Reuters reported in late September that Tesla planned to keep production at the upgraded Shanghai plant at around 93% of capacity through the year.

Tesla shares fell 6.4% during trading on Monday.

Tesla inventory: Aging inventory

The EV giant produces four electric vehicles: the luxury Model S sedan and Model X SUV as well as the Model 3 sedan and Model Y crossover.

In China, Tesla only sells Model 3 and Model Y. Meanwhile, China EV rivals BID (WANT), Li Auto (LI) and Nine (NIO) all see increasing sales as they roll out new model lines.

Additional Tesla models – the Roadster, Semi and Cybertruck (an EV pickup) – have been pushed back several times. Musk says the Cybertruck is on track for “early” production in mid-2023. Reuters has reported that mass production will begin in late 2023.

Tesla Semi Bulls

The conflicting news for Tesla in China, record sales and reports of a production cut, follows the first Tesla Semi deliveries on Thursday.

The highly anticipated 18-wheel, long-range EV hauler is capable of traveling an estimated 500 miles per charge with 82,000 pounds of cargo, according to Tesla.

The company also says the truck can accelerate from zero to 60 miles per hour in 20 seconds and charge up to 70% of its range in half an hour.

The first Tesla Semi trucks are to PepsiCo (PEP) in California. Pepsi placed its order for 100 electric cars when the Semi was first announced in 2017.

CFRA senior equity analyst Garrett Nelson on Friday wrote his firm forecasts for strong demand for the Tesla Semi.

“We are bullish on demand for the Semi as TSLA moves forward to increase production of the truck to 50,000 units by 2024, and see significant appetite from large companies looking to reduce their carbon footprints,” Nelson wrote.

Semi-truck deliveries could mark a victory in a year in which Tesla stock has largely been a loser. The share price has fallen around 50% in 2022, retreating to levels near when the company joined the S&P 500.

The withdrawal has taken place as analysts suggest that demand for Tesla EVs in China has slowed. Musk’s recent purchase of Twitter also appears to have had a negative impact on Tesla stock.

Follow Kit Norton on Twitter @KitNorton for more coverage.


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