Tesla shares fall again as China records fail amid Covid outbreak
tesla (TSLA) shares tumbled on Tuesday as weekly Chinese vehicle registration data suggested the global electric vehicle giant’s year-end incentives weren’t enough to prop up Tesla deliveries.
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The insurance data suggested that China’s total new energy vehicle (NEV) sales from December 19 to 25 were about 182,000 units. That represents a 48% increase compared to last year and a 12.6% increase from the previous week, CnEVPost reported Tuesday. Despite year-end discounts, however, Tesla registrations fell to an estimated 8,915 for the week. Tesla’s registrations for the first three weeks of December were 11,670, 12,977, and 10,254, respectively.
As China has eased Covid restrictions, there have been reports of widespread outbreaks of the virus across the country. Tesla China and other China-based automakers have now warned that deliveries and production could drop due to Covid disruptions.
On Tuesday, Reuters reported that Tesla halted production on December 24 at its Shanghai facility. Workers are scheduled to return on January 1, 2023. Tesla will run production for 17 days in January between January 3-19 and halt electric vehicle production from January 20-31 for an extended New Year break. Chinese mole, according to Reuters.
A year-end production outage had been widely reported in recent weeks. Tesla’s Shanghai plant had already slowed production earlier in the month, and inventories built up quickly despite a late-October price cut and major year-end incentives.
Tesla, which had previously denied that production was halted, said the shutdown was for planned annual maintenance.
Tesla shares fell more than 11% to 109.10 in tuesday trade. Last week, Tesla shares fell 18% to 123.15 after falling 16.1% the previous week. Those are the worst weekly losses since the March 2020 Covid crash. TSLA shares are at a 27-month low, down 73% from the November 2021 peak.
Meanwhile, Tesla China’s competitor child (INFANT) cut its fourth-quarter delivery guidance on Tuesday. Chinese electric vehicle giant BYD (I WILL) has also warned of weaker production due to Covid among staff.
Electric vehicle registrations in China
Despite Covid, BYD still reported huge and higher weekly EV deliveries last week, even as Tesla and Nio saw week-on-week declines.
In the week ending December 25, BYD vehicle registrations reached 51,636, up from 50,462 and 44,817 in the previous two weeks. BYD said last week that Covid cases among workers are reducing production by 2,000-3,000 vehicles per day.
Nio’s record estimates fell to 2,690 from 3,464. On Tuesday, Nio lowered guidance for fourth-quarter deliveries, citing Covid outbreaks.
The EV startup now expects to deliver 38,500-39,500 vehicles in the fourth quarter, a far cry from the previous guidance of 43,000-48,000. That implied December sales of 14,263-15,263, which would still be a record.
The company said in a statement that it “has been facing delivery and production challenges, along with certain supply chain restrictions, caused by the outbreak of the Omicron coronavirus variant in major cities in China.”
China has downgraded the state of emergency on its coronavirus outbreak, despite reports that infections are rising at a rapid rate. China will also end quarantine rules for incoming travelers, along with reducing airline capacity and international travel restrictions, on January 8.
China-based electric vehicle start-up li car (LI) saw registrations improve to 5,155, from 4,558 and 3,013 last week. XPeng (XPEV), another company trying to challenge Tesla in China, scored 2,536 versus 3,257 in the previous week.
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Tesla Stock: Looking Ahead
Tesla is likely to release fourth-quarter and full-year global deliveries on January 2. Chinese electric vehicle companies Nio, Li Auto and XPeng will likely release delivery data for December, Q4 and 2022 on Sunday, January 1. The Warren Buffett-backed BYD is expected to give its own report in early January.
Over the weekend, Nio unveiled its EC7 coupe SUV, which is likely to compete against the Tesla Model Y in the high-end market. EC7 deliveries will start in May 2023. Nio also introduced a facelifted ES8 SUV, now on the NT 2.0 platform as its all-new models. Deliveries begin in June.
As analysts ring warning bells in the auto industry in 2023, China’s EV makers have been announcing and rolling out new models, while Tesla has maintained its two-model focus in China.
Along with Tesla shares, other Chinese electric vehicle makers suffered losses on Tuesday. Nio shares fell 8.2%. LI and XPeng shares fell more than 1%. BYD shares, which trade over the counter in the US, rose marginally.
Follow Kit Norton on Twitter @KitNorton for more coverage.
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