Tesla (NASDAQ:TSLA) experienced a notable drop of over 7% in its shares on Monday following reports of declining sales in China during February. The company faced heightened competition and a slowdown attributed to the Lunar New Year holidays in the region.
The sales figures cast a shadow on Tesla’s global delivery outlook at a time when the leading electric vehicle (EV) manufacturer grapples with dwindling demand and challenges stemming from the absence of entry-level vehicles and the aging of its product lineup.
In February, Tesla sold 60,365 vehicles made in China, marking a 19% decline from the previous year and reaching the lowest level since December 2022, according to data from the China Passenger Car Association.
Tesla shares plummeted by 7.8% to $186.95 on the day, marking a drop of approximately 25% since the beginning of the year.
The timing of China’s Lunar New Year holidays in February contributed to reduced car purchasing activities, further impacting Tesla’s sales. Additionally, Tesla implemented a series of price cuts and incentives to combat increasing competition from Chinese counterparts like BYD. The company recently introduced new incentives, including insurance subsidies, to attract consumers in the world’s largest auto market.
In the United States, Tesla launched initiatives such as offering 5,000 free Supercharging miles to customers taking delivery of a new vehicle by March 31. In February, the company also temporarily reduced prices for some of its Model Y cars in the U.S.
Analyst Troy Teslike revised down his estimates for Tesla’s global deliveries for the January to March period to 450,000 units and cautioned about a potential further reduction. He suggested that weaker-than-expected sales in China, despite price cuts, indicate a underlying demand issue.
In January, Tesla had already warned of a notably lower sales growth for the year ahead as it prioritizes the production of its more affordable electric vehicles.
Featured Image: Freepik
Author Faith Yakubu 
