Tesla’s sales in China fell 98% in April amid Shanghi shutdowns

The electric car maker sold 1,512 vehicles in mainland China last month, a 98% drop from March, according to data from the China Passenger Car Association. Tesla’s domestic production also fell by 81% to 10,757 vehicles in April, compared with 55,462 in March.

Tesla did not export any cars made by Shanghai in April, compared to 60 exported in March.

The fall comes as tens of millions of people in at least 31 cities have been locked up for several weeks, which has caused massive disruptions in the supply chain and affected consumer consumption in the world’s second largest economy.

This is a strong turnaround for Tesla after a strong start to the year in mainland China. Tesla was the top seller of electric vehicles in the country in March, delivering 65,1[ads1]84 cars from the factory in Shanghai. This figure was up 15% from February, as consumer demand for electric cars remains strong even during the pandemic.

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

But 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 closed for several weeks last month, and only recently managed to restart production. But it seems to have hit another chin.
On Tuesday, Reuters reported, citing unidentified sources, that Tesla had stopped most of its production again due to problems with suppliers. The company did not respond to a request for comment.

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

“I have had talks with the Chinese government in recent days, and it is clear that the closures will be lifted quickly,” Musk said Tuesday at a virtual car conference organized by the Financial Times.

“So I do not expect this to be a significant issue in the coming weeks,” he said.

The impact of Shanghai

Not everyone shares Musk’s optimism. Shanghai has been closed since the end of March, and it is not clear when the restrictions will be lifted in full.

Authorities in the city tightened the restrictions further over the weekend, after President Xi Jinping promised to “steadfastly” double zero-Covid policy.

Other car manufacturers also reported a sharp decline in sales and production last month.

Toyota (TM) said on Tuesday that it has shut down 14 production lines at eight factories in Japan, from May 16 to May 21, due to the lack of parts due to the shutdown in Shanghai.

The company’s global production will be reduced by 50,000 units for May because of that, it added.

“The lack of semiconductors, the proliferation of COVID-19 and other factors make it difficult to see several months ahead.”

Another Japanese carmaker, Nissan engine (NSANY)reported on Monday that sales in China were down 46% in April from a year ago.

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

Overall, China’s passenger car sales fell 34% in April from March, the largest fall recorded, the China Passenger Car Association said.

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

“The purchasing power of the car market has been damaged, and consumers’ willingness to buy a car has fallen,” it said.

The industry group also acknowledged that there has been a “significant impact” on supply chains since the shutdowns in Shanghai and Changchun, as the two cities are major production bases for key parts of the automotive industry.

In Shanghai, five major carmakers recorded an average 75% drop in production in April from last month. In northeastern Changchun, major automakers saw their production fall by 54% over the same period.

On Wednesday, separate data from the China Association of Automobile Manufacturers, another major industry association, showed that the country’s total car sales fell by 46% in April from March, reaching 1.2 million cars. It was 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 are gradually returning to normal.

Retail sales of new energy vehicles – which include electric cars and plug-in hybrids – fell 37% from March, “unlike any other April in history,” the CPCA said. But demand is expected to rise again, and will remain strong in the near future.

“Under the current environment, self-driving travel has become the first choice. Influenced by high oil prices, more people will choose to buy new energy vehicles,” the association said, adding that sales of electric cars will pick up sharply this month from April.

—NCN Tokyo Agency and Kathleen Benoza contributed to this report.

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