Home Tesla Tesla Shares Plunge Below $600 After Reports Of Collapse In May China...

Tesla Shares Plunge Below $600 After Reports Of Collapse In May China Orders

16
0
tesla-shares-plunge-below-$600-after-reports-of-collapse-in-may-china-orders

It looks like the nightmare in China for Tesla could still only be beginning. Shares were pummeled in mid-day trading on Thursday, falling sharply at about 1400EST on news that the company’s orders in China have halved in May, according to The Information.

Scoop: Tesla’s China orders down by 50% in May, we are told based on internal data. The company’s China crisis continues. $tsla @JuroOsawahttps://t.co/sx67ACv8un

— Jessica Lessin (@Jessicalessin) June 3, 2021

The Information wrote “the electric car pioneer grappled with public outcry and government criticism over its handling of consumer complaints. Taken together, the developments put in doubt Tesla’s vaunted position and success in the world’s biggest electric vehicle market.”

Traders dumped the shares on the news, pushing TSLA back below the $600 level with a vengeance. China is one of the company’s most critical markets, as its Shanghai factory has helped TSLA consistently meet Wall Street’s optimistic production and sales targets. 

http://feedproxy.google.com/

Last week we detailed that the rocky road between Tesla and the Chinese Communist Party looked like it was continuing. Meanwhile, just hours ago we noted that Tesla’s global EV market share was in the midst of collapsing. 

The company’s market share in the world’s largest auto market – China – collapsed to 8% in April from 19% in March. That drop should be no surprise given the collapse in sales numbers we reported for Tesla in China last month. “GM remained the share leader in China in April, with a 20% share, driven by continued volume traction of the low cost Wuling HongGuang Mini,” Levy’s note, summarized by Bloomberg, pointed out.

May’s numbers now look like they could be equally as ugly.

 http://feedproxy.google.com/

Specifically, last week, we noted that the automaker is facing “further fallout” in China as some local governments are reviewing Tesla vehicle ownership among their staff, citing the vehicles posing potential security risks, according to Bloomberg

What could be contributing to the sales collapse?

As we have reported, government bodies have been asked to check and report on employees who own Teslas in Zhejiang and Guangxi. Employees are being “forbidden” from driving into certain official areas, due to supposed security risks, the report notes. 

Other official Chinese bodies are following suit. The China Meteorological Administration, for example, has already told its employees not to buy Tesla EVs and, if they have already, to transfer ownership of the vehicles. The Propaganda Department of the Chinese Communist Party (yes, this is actually what it is called) is also “checking whether any employees or their family own Teslas.”

Any continued major hiccups in Tesla’s relationship with China could be devastating for the automaker, who relies on the world’s largest auto market to help it redline production to meet Wall Street’s increasingly optimistic expectations. 

Recall, we noted in mid May that Teslas had been banned from some Chinese government compounds due to concerns about their cameras. 

http://feedproxy.google.com/
“China rocks.”

Staff at some Chinese government officers were told not to park their Tesla cars inside of government compounds “because of security concerns over cameras installed on the vehicles,” Reuters reported in May.

“At least two government agencies” in Beijing and Shanghai have been told the same, according to the same report. It’s unclear how many employees and vehicles this had a direct impact on. 

Despite the fact that cameras and sensors are found in many vehicles, the restriction “only applies to Tesla cars”, the report noted. This isn’t the first time China has cited security concerns as a reason to ban Tesla vehicles. Back in March, China banned Tesla vehicles from military bases over similar concerns about the vehicles’ cameras.

The ban was due to “concerns about sensitive data being collected by cameras built into the vehicles.”

Recall, before making somewhat of an about face on their recent attitude on Tesla (after Musk’s odd rebuke of bitcoin), Chinese state media had been anything but friendly to the U.S. auto manufacturer. 

Interestingly, on the heels of this collapse in sales, we reported that Tesla has established a data center in China, the company said last week, and data generated by all cars sold in the country will be stored domestically.

http://feedproxy.google.com/

A May 25 post on the Weibo social media site said that the data center has already been built and the company plans on expanding its data network in China.

Tesla also said they want to start a platform where Tesla owners can make inquiries regarding their cars, and focus their efforts on ensuring the smooth operation of their databases as well as safeguarding customer data.

We have been documenting the ongoing spat between Tesla and the CCP over the last few months, apparently (at least publicly) catalyzed by a protestor at the Shanghai Auto Show alleging faulty breaks on Tesla vehicles. This led to intense shaming by Chinese media, who called Tesla’s handling of the situation a “blunder” and suggested it could “inflict serious damage” on Tesla with the Chinese market. 

Get back to work, Elon!