Tesla's Electric Vehicle Sales Declined by Nearly Half Last Month in China
【Summary】As Tesla deals with the fallout of increased government scrutiny over its customer service and how it handles data, its vehicle sales fell last month in China by nearly 50%. Tesla is also facing growing competition from rival automakers in China in the electric vehicle space.
For years, electric automaker Tesla operated with little competition from the world's automakers in the electric vehicle space, as many carmakers were late to fully embrace EV technology.
However, now that Tesla has risen to become the world's most valuable automaker, that is not the case anymore, as legacy automakers introduce their own new fully electric models to compete with Tesla, especially in China, which is the world's largest auto market.
As a result of the rising competition in the EV segment in China, and while Tesla deals with the fallout of increased government scrutiny over its customer service and how it handles data, its vehicle sales fell last month in China by nearly 50%. Tesla's declining sales were first reported by The Information, citing internal data.
The company's monthly net orders in China dropped to about 9,800 in May from more than 18,000 in April, the report said.
Tesla sold 11,671 Model 3 and Model Y vehicles in April in China, but exported another 14,174. Compared with March, when it sold most of its 35,478 cars built at its Shanghai factory locally, according to the China Passenger Car Association.
The drop in sales may be a preview of what might be facing in China, as new EV startups like XPeng and NIO Inc continue to gain market share in the world's biggest auto market. Tesla is also facing competition from China's own legacy automakers that are developing fully-electric models for the first time.
Last month, XPeng reported total revenues of RMB2,950.9 million (US$450.4 million) for the first quarter of 2021, representing an increase of 616.1% from the same period last year and a 3.5% increase from the fourth quarter of 2020.
XPeng's electric vehicle deliveries totaled 13,340 units in the first quarter of 2021, representing an increase of 487.4% from 2,271 in the corresponding period of 2020 and an increase of 2.9% from 12,964 vehicles in the fourth quarter of 2020. Xpeng delivered its first EV, the G3 SUV, less than three years ago.
In addition to the growing competition in China, Tesla is facing scrutiny over its handling of customer complaints as well as quality issues of its vehicles. Tesla is also facing pressure from government officials over how the company collects user data from its vehicles.
The government in China plays a large role in the safety and oversight of the auto industry, which puts more pressure on the company to appease regulators.
In March, China drafted new rules to ensure the security of data generated by smart cars to ensure that data collected from Tesla vehicles in China is stored in the country.
In response, Tesla said it would set up a China data center, launch self-inspection to improve services and work more closely with regulators. Tesla is currently developing a platform for owners in China that will allow them to access data generated by their vehicles. The company aims to launch the platform by this year.
Last month, Reuters reported that staff at some Chinese government offices have been told not to park their Tesla vehicles inside government compounds due to security concerns over cameras installed on the vehicles.
In April, Tesla was again targeted by state media and regulators after a customer angry over the handling of her complaint about malfunctioning brakes, climbed on top of a Tesla car in protest at the Shanghai auto show. The video of the incident went viral, and brought light to how Tesla handled customer complaints in China leading up to the incident.
The woman's parents were injured in a February crash in a Model 3, which she blamed on defective brakes. Tesla was forced to provide the data related to the brake incident to the customer complying with the local authorities' order.
Tesla's Model 3 sedan was the best-selling electric vehicle in China until this year when the Wuling Hong Guang Mini EV overtook the Tesla Model 3 as the most popular EV.
The compact budget EV, which starts at just RMB 28,800 ($US4,450), is manufactured by SGMW, the joint venture between Chinese automaker SAIC, Liuzhou Wuling Motors Co Ltd, and U.S. automaker General Motors.
SGMW sold 32,762 of the Mini EVs in January, compared to 21,589 units of the much more expensive Tesla Model 3.
In the U.S. the Tesla Model Y remains the best selling EV. But China remains an important market for Tesla to remain profitable.
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