Tesla China Sales Drop As Rivals Nio, Xpeng Narrow Gap

Sales of electric cars in China more than tripled to 158,000 in January from a year ago, although they dropped 24% month over month, according to the China Passenger Car Association. Tesla stock rose.


Tesla (TSLA) sold 15,484 vehicles in China, a notable drop from the 23,804 cars in December.

The January figure includes Model 3s and Ys made at the Shanghai Gigafactory. Tesla is the top-selling EV maker in China. But China-based rivals are narrowing the gap. Nio (NIO) said it delivered 7,225 vehicles in January, more than four times the number for January 2020. Xpeng (XPEV) notched a sixfold increase with 6,015 deliveries. And Li Auto (LI) delivered 5,379 vehicles, an increase of 356% year-over-year.

Tesla is likely to see competition grow in China from U.S. carmakers, too. Last month, Ford (F) said it would build its Mustang Mach-E in China for the first time to appeal to Chinese customers.

Retail sales of all passenger cars in China rose 26% to 2.16 million vehicles last month, the strongest growth since September 2016. Covid-19 shutdowns last year hit the auto market hard. Sales sank 20% in January 2020 and ended December 7% below the year-ago period.

The CPCA sees car sales growing 7% in 2021, but cautioned the second half of the year could see pressure due to chip shortages affecting the whole industry.

Meanwhile, Chinese authorities told Tesla on Monday it had to beef up quality and safety measures. Tesla, which has expanded rapidly in China thanks in large part to Chinese government subsidies, has been dogged by consumer complaints.

Officials met with Tesla to discuss reports about battery fires, unexpected acceleration and failures in over-the-air software updates, according to Reuters. The officials urged Tesla to operate according to China's laws and protect customer rights.

Tesla last week recalled more than 36,000 Model S and Model X vehicles imported from the U.S. due to touch-screen problems. That recall follows another one in October that affected more than 48,000 imported cars of the same models in China because of faulty suspension systems.

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