Tesla Stock Drops After Sales Record In China, Production Cut Reports

Tesla (TSLA) sold a record number of China-made vehicles in November, according to data released by the EV giant Monday. However, multiple reports on Monday said Tesla is also planning to cut its EV production in China, as demand seems to be faltering. Tesla stock tumbled Monday.


The EV giant on Monday refuted the reports, calling the claims that it was cutting its China production untrue.

The US-based global EV company sold 100,291 China-made electric vehicles in November. That represents around a 90% increase compared to last year and a 40% gain compared to the 71,704 Tesla EVs sold in October.

Between January 2022-November 2022, Tesla has sold 655,069 China-made vehicles, up 63% year over year.

However, despite these increases, reports came out Monday that Tesla will cut its Shanghai plant production by up to 20% as soon as this week.

The outlook for demand in China has become less clear, even with a late October price cut and various other incentives, as the company ramps up its output to record levels. Tesla also exports a large number of China-made EVs, which are produced at its Shanghai factory. There were 71,704 Tesla Shanghai EVs sold in October, with 54,504 exported and 17,200 vehicles delivered in China.

Tesla’s Shanghai plant had upgrades this past summer that were expected to increase production capacity to around 1 million units annually. However, Reuters reported in late September that Tesla planned to keep production at the upgraded Shanghai plant at around 93% of capacity through the end of the year.

Tesla stock dropped 6.4% Monday during market trading.

Tesla Stock: Aging Inventory

The EV giant produces four electric vehicles: the luxury Model S sedan and Model X SUV, as well as the Model 3 sedan and Model Y crossover.

In China, Tesla only sells the Model 3 and the Model Y. Meanwhile, China EV rivals BYD (BYDDF), Li Auto (LI) and nio (NIO) are all seeing surging sales as they roll out new model lines.

Additional Tesla models — the Roadster, Semi and Cybertruck (an EV pickup truck) — have been pushed back multiple times. Musk says the Cybertruck is on track for “early” production in mid-2023. Reuters has reported that mass production will start at the end of 2023.

Tesla Semi Bulls

The conflicting news for Tesla in China, record sales and reports of a production cut, follows the first Tesla Semi deliveries on Thursday.

The long-awaited eighteen-wheeler, long-haul EV freighter is capable of traveling an estimated 500 miles per charge with 82,000 pounds of freight, according to Tesla.

The company also says the truck can accelerate from zero to 60 miles an hour in 20 seconds and recharge up to 70% of its range in half an hour.

The first Tesla Semi trucks are going to PepsiCo (PEP) in California. Pepsi placed its order for 100 EVs when the Semi was first announced in 2017.

CFRA senior equity analyst Garrett Nelson wrote Friday his firm forecasts strong demand for the Tesla Semi.

“We are bullish on demand for the Semi as TSLA moves forward with ramping production of the truck to 50K units in 2024, seeing considerable appetite from large corporations seeking to reduce their carbon footprints,” Nelson wrote.

Semi truck deliveries could mark a win in a year during which Tesla stock has largely been a loser. Its share price has shed around 50% in 2022, retreating back to levels near when the company joined the S&P 500.

The pullback has taken place as analysts suggest that demand for Tesla EVs in China has softened. Musk’s recent purchase of Twitter also appears to have had a negative impact on Tesla stock.

Please follow Kit Norton on Twitter @KitNorton for more coverage.


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