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Tesla Achieves its Best Ever Sales Month in China, the World's Biggest Auto Market

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【Summary】​Electric automaker Tesla just had its best sales month ever in China despite the coronavirus pandemic which caused a big drop in new vehicle sales in China. The California automaker sold 10,160 vehicles in China in March, the China Passenger Car Association (CPCA) said on Thursday.

Eric Walz    Apr 09, 2020 1:30 PM PT
Tesla Achieves its Best Ever Sales Month in China, the World's Biggest Auto Market
China-made Model 3 sedans at Tesla's factory in Shanghai on January 7, 2020. (Photo: Reuters/Aly Song)

Electric automaker Tesla just had its best sales month ever in China despite the coronavirus pandemic which caused a big drop in new vehicle sales in China. The California automaker sold 10,160 vehicles in China in March, the China Passenger Car Association (CPCA) said on Thursday. 

The jump in sales makes the Tesla Model 3, which is now being built at Tesla's new Shanghai gigafactory, one of the most popular electric models sold in China. The Model 3 equals around 30% of the battery electric vehicles sold in China, Cui Dongshu, CPCA secretary general, said.

Tesla sold around 3,900 units in February, up from 2,620 vehicles in January, CPCA data showed. However, the CPCA said that March auto sales in China were down 40.8% year-over-year, according to Reuters. This compares to a drop of 80% for February sales in China, at the height of the coronavirus pandemic. 

The figures released by the CPCA differ slightly from Tesla's own reported deliveries, as the CPCA uses a different method to count vehicle sales. Tesla counts a vehicle as "delivered" once a vehicle transferred to a customer and all paperwork is finalized.

The strong sales by Tesla are an indicator that China's auto market will rebound from the coronavirus pandemic. Officials said on Thursday that China's auto market will recover and remain stable for a long period despite short-term pressure from the coronavirus outbreak. 

The first cases of the coronavirus were reported in the Chinese city of Wuhan, which is home to much of China's auto manufacturing. The epidemic shut down auto production in the region.

China is the world's biggest auto market and an important market for Tesla. In 2019, the number of passenger vehicles sold was 20.7 million. Although that number represents a 7.4% drop from 2018, it's still a significant amount of vehicles sold.

One of the reasons that Tesla built its Shanghai factory to be able sell its electric vehicles locally and avoid import tariffs. In Dec 2019, Tesla announced that its China-built Model 3s would also receive state subsidies, a move that will further help Tesla's aggressive push into China.

With its new $2 billion factory in China, Tesla has a big advantage over its competitors, which includes more established automakers, such as BMW and Mercedes Benz. Five of the top 10 vehicles sold from the U.S. to China last year were from BMW and Mercedes-Benz models.

BMW for example, exported over $8 billion worth of vehicles from its Spartanberg, South Carolina plant in 2018, with many of them shipped to customers in China. However, the vehicles are subjected to China's import tariffs levied against the U.S. since they are built on U.S. soil.

For years, The Chinese government required that all overseas automakers seeking to build vehicles in China set up a joint venture with a Chinese partner. Ownership stake was limited to no more than 50% for foreign automakers.

U.S. automaker General Motors for example, has operated a successful partnership with Chinese automaker SAIC since 1997 with the joint venture company SAIC-GM. China has been GM's largest market since 2012, accounting for more than a third of the company's global sales. 

In 2018, China relaxed the rules in an effort to reduce trade tensions between China and the U.S., paving the way for Tesla to build its Shanghai factory. Tesla is the first overseas automaker to wholly own an auto factory in China. 

Tesla's Shanghai plant was selected by the Chinese government as an exemplary project to demonstrate its friendliness to foreign businesses, Automotive News reported in January. 

The first China-made Model 3s were delivered to Chinese customers in early January, just 357 days after breaking ground on the new facility.

Tesla aims to build around 150,000 Model 3 sedans a year from its Shanghai factory.

resource from: Reuters

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