Tesla (TSLA.O) will give up its pole position in China. An April sales drop and pared-back plans for its Shanghai plant suggest it is already facing a rougher ride. The $595 billion brand can still prosper, but not as leader of the pack.
The U.S. company is under fire. At last month’s Shanghai auto show a customer clambered on to a Tesla in a t-shirt bearing the words, “the brakes don’t work”. Her protest went viral, perhaps because it followed allegations of battery fires, as well as U.S. investigations into its autopilot systems. Tesla’s clumsy response that the protester might be a professional acting on behalf of others made matters worse. The company later issued an apology and confirmed it would work with regulators to resolve any issues.
The incident could be a bump in the road. Mercedes had to deal with a similar incident in April, and brand boycotts are often short-lived in China. But Tesla’s woes flash warning lights, because it has unprecedented privileges as the first Western marque to enter China without a local partner. That and a huge share of the electric-vehicle market leave it vulnerable to scrutiny and censure as Beijing backs domestic carmakers.
Granted, the 27% fall in April sales from the previous month still leaves Tesla delivering, at some 25,000 cars, far more than in January or February. But it comes as Chinese consumers have plenty of options, including Nio (NIO.N), Xpeng (XPEV.N) and other home-grown champions. Meanwhile, Reuters’ reported on Tuesday that Tesla is halting plans to buy land needed to make its Shanghai base an export hub shows U.S.-China tensions remain a hindrance to Musk’s ambitions.
Tesla is no more in Top spot in Norway
Tesla doesn’t need to be in the top spot in China, just as it no longer is in Norway. Chinese sales, though, account for around a third of Tesla’s total and Musk has been talking up its prospects. Even after its 13% drop this year, the stock trades at 206 times earnings versus an industry average of 13. Signs it’s losing energy in China could prompt investors to take their foot further off the accelerator.
The whole News In Brief
- Tesla is facing back lash in Chinese State Media after a consumer protest in Shanghai Auto Show for how they handled a complaint. The official media handle Xinhua called this incident a insincere one.
- After the drop in sales of Tesla in April from 35,378 cars to 25,845 . In March Tesla had sold 35,378 cars which was highest in the first quarter. When compared to February and January where sales was 18,318 and 15,484 respectively.
- U. S. Electric car maker company Tesla halted it’s land expansion plan. It was to expand more it’s Shanghai plant and make it a exporting hub. But it seems the ambitions of Musk has halted due to uncertainty in the US -China relationship.
Inputs from reuters.com and therightmag.com team.