Tesla shares slid after its sales in China fell to their lowest level in more than a year

By Hyunjoo Jin

SAN FRANCISCO (Reuters) – Tesla Inc shares fell more than 7% on Monday after its February sales fell in China, where it will likely face a slowdown during the Lunar New Year holiday.

Falling sales in its key market have dampened the outlook for Tesla's global deliveries, as the largest electric vehicle maker grapples with falling demand and rising competition, weighed down by a shortage and age of entry-level vehicles. Its product assortment.

Tesla sold 60,365 Chinese-made vehicles in February, down 19% from a year earlier and the lowest volume since December 2022, according to data from the China Passenger Car Association. Tesla's Shanghai factory makes Model Y and Model 3 electric vehicles for the domestic market, Europe and other countries, and accounts for more than half of Tesla's global deliveries last year.

Tesla shares closed down 7.2% on the day at $188.14, a decline of about 24% since the beginning of the year.

China's Lunar New Year holiday fell in February, reducing car purchasing activities. Tesla has introduced a series of price cuts and incentives to stave off slowing demand and increasing competition from Chinese rivals such as BYD.

“It's been a perfect storm of headwinds for Tesla in China. This was a negative data point adding fuel to the fire around the stock,” Wedbush analyst Dan Ives said.

Last week, Tesla unveiled new incentives including insurance subsidies to attract consumers in the world's largest car market.

BYD on Monday launched a new version of its best-selling car at a lower price than the final price of its discontinued predecessor, escalating a price war with rivals. BYD also saw its sales fall 37% to 122,311 vehicles in February compared to the previous year.

In the US, Tesla this month offered 5,000 free charging miles to customers who trade in their old cars for a new Tesla by March 31. In February, Tesla temporarily reduced the prices of some of its Model Y vehicles in the United States.

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Analyst Troy Teslick revised his forecast for global Tesla deliveries for the first quarter of this year, saying weaker-than-expected China sales despite price cuts indicate a “demand problem.”

In January, Tesla warned of “significantly low” sales growth this year as it focuses on producing its cheaper electric car.

(Reporting by Hyunjoo Jin; Editing by Bill Berkrot, Kevin Levy; Editing by Sandra Maler)