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Tesla (TSLA) stock hit a multi-week low as slowing Chinese shipments and new price cuts in China signal trouble for the EV powerhouse in the world’s largest auto market.
According to preliminary data released by China’s PCA (Passenger Car Association) via Bloomberg, Tesla reported shipments of 60,365 vehicles from its Giga Shanghai factory in February. Shipments in February were down 16% from the previous month and 19% from the previous year, making the total shipments the lowest since December 2022.
Tesla shares fell 7.16% to close at their lowest since February 13th.
China’s lunar calendar holiday coincided with February of this year, during which China was shut down for almost two weeks. Historically, this has led to a decline in the country’s economic activity and sales. Additionally, Tesla devotes the first few months of a quarter to shipping outside of China, and typically ramps up shipments in the second half of the quarter for sales within China.
But Tesla’s shipment totals are the lowest in a year, a concern for the company, which sees China as a huge growth market. Even China’s BYD, which surpassed Tesla in overall EV sales in the fourth quarter and has a near monopoly on China’s EV market, saw sales decline by 37% in February, from 193,655 to 122,311.
China currently sells the most EVs in the world, but a recent slowdown in EV demand sent Chinese automakers into another price war earlier this year, including Tesla.
Tesla’s latest incentives on the mainland include “up to $4.8 million for customers purchasing Model 3 and Model Y from existing inventory by the end of March,” according to a report by Deutsche Bank’s Emanuel Rosner released on Monday. Includes a significant discount. Rozner said the new incentives include insurance discounts, paint change discounts and priority financing plans for the Model Y.
The latest incentives come after Tesla cut the prices of its Model 3 and Model Y by 5.9% and 2.8%, respectively, in January.
China’s EV market is highly competitive, and Tesla having to cut prices and possibly reduce deliveries is definitely a concern for investors.
Conversely, the BYD threat is unlikely to materialize in Tesla’s home market of the US, at least for now.
“We have no plans to come to the U.S.,” Stella Li, BYD executive vice president and CEO of BYD Americas, told Yahoo Finance Live. “It’s an interesting market, but it’s very complex,” he added, citing growing political opposition to Chinese companies and slowing EV adoption.
Concerns over BYD’s entry into the U.S. market come as the China-based automaker will set up a base in Mexico to import EVs into the U.S. without customs penalties under the terms of the U.S.-Mexico-Canada Agreement. There were reports that the company was planning to use the factory, raising concerns.
Pras Subramanian is a reporter for Yahoo Finance.you can follow him twitter And even more Instagram.
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