Tesla shares plunge after disappointing car sales in China

A Tesla logo is seen on a vehicle on display in Austin, Texas, Wednesday, Feb. 22, 2023.
A Tesla logo is seen on a vehicle on display in Austin, Texas, Wednesday, Feb. 22, 2023. Copyright Eric Gay/Copyright 2023 The AP. All rights reserved
By Indrabati Lahiri
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Tesla shares hit as sales in China drop dramatically because of a lack of demand over the Lunar New Year.

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Tesla shares dropped 7.16% on Monday to $188.14 (€173.38) following Chinese sales falling to over one-year lows. This was the lowest since 14 February.

Tesla's Shanghai gigafactory saw about 60,365 vehicle shipments in February, according to China's Passenger Car Association, reported by Bloomberg. That was 16% less than January, as well as 19% down year-on-year. It was also the lowest sales figure since December 2022.

The factory has the capacity to produce more than 950,000 units, accounting for about 25% of Shanghai's total car production.

The fall is likely to have been caused by a drop in Chinese sales around the Lunar New Year holidays. However, as China is one of Tesla's biggest markets, this raises key questions about the car manufacturer's global performance.

Tesla is already facing increasingly stiff competition from Chinese electric vehicle maker BYD, which overtook Tesla in the sale of battery-only cars in Q4 2023, selling 526,000 units, compared to Tesla's 484,000 units.

Tesla facing increasing pushback in Europe

Tesla is facing rising opposition in Germany, especially when it comes to expanding its Grunheide gigafactory, near Berlin, which would involve some forest clearing. Protests included people building makeshift treehouses and camps in the forest.

Grunheide municipality residents have voted against the expansion, mainly because of concerns about Tesla contributing to water, air and noise pollution in the area. Tesla has denied that its plant has any impact on the region's water supply. Other worries include concerns about factory working conditions, as well as the impact of lithium mining in less developed economies.

Lou Winters, from the group Tesla den Hahn abdrehen, or "Turn off Tesla’s tap", as reported in the Daily Telegraph, said: "Tesla brought a lot of noise and air pollution in the region because of all the trucks that drive every day over the streets.

"I talk to people who moved some years ago to Grunheide for the fresh air, for the calmness. Now almost nothing is left of this. For the first time in the history of the factory, the people of the region had the chance to say whether they wanted the expansion or not."

Germany had previously welcomed Tesla, even speeding up the establishment of the gigafactory, despite the country's considerable bureaucracy. However, local culture clashes remained, with growing animosity being directed towards the company, which also resulted in paint being thrown at Tesla's Berlin store.

Elsewhere in Europe, Tesla has been dealing with a possible privacy investigation in the Netherlands, as well as union rebellions in the Scandinavian countries. It has also been facing growing unease in Brussels because of its car imports.

One reason for this could be the EU preparing to encourage its own domestic production of electric vehicles, thus reducing reliance on Tesla, and other Chinese competitors.

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