Tesla’s Sales Performance in China

BEIJING (Reuters) – Tesla (NASDAQ:TSLA) achieved its best sales month of the year in August, driven by strong demand in smaller cities.

The company reported sales exceeding 63,000 cars in China last month, marking a 37% increase from July, though still slightly below August 2022, when sales were 64,694 vehicles.

Despite this improvement, Tesla’s performance significantly trails major Chinese competitors. BYD (SZ:002594), the largest EV manufacturer globally, reported a 35% surge in August sales from the previous year, reaching a record high of 370,854 passenger vehicles. Other local competitors, such as Leapmotor (HK:9863) and Li Auto (NASDAQ:LI), also showed increased sales.

Tesla has faced challenges due to a prolonged price war in China, sluggish economic growth, and diminished consumer confidence. The company’s sales fell by 5% in the first half of the year.

To combat these issues, Tesla has reduced its local sales workforce amid global cutbacks. However, recent sales have been buoyed by several initiatives:
– Since April, Tesla has provided zero-interest loans of up to five years to buyers.
– Various local governments have recently included Tesla vehicles in official car purchase eligibility.
– Tesla received regulatory approval from the country’s premier auto industry association, confirming that its data collection practices comply with regulations, allowing its vehicles to access previously restricted government spaces.

An analysis by China Merchants Bank International highlighted a 78% year-on-year increase in Tesla deliveries in tier-three cities during July, with a 47% rise in second-tier cities like Hangzhou and Nanjing.

Further data from the China Passenger Car Association indicated a 3% growth in sales of Tesla vehicles made in China in August compared to last year, totaling 86,697 units. Deliveries of Model 3 and Model Y vehicles climbed 17% from July.

Additionally, plans are underway to introduce a six-seat variant of the Model Y in China, anticipated for late 2025, aiming to enhance the appeal of its best-selling but aging electric vehicle.