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Tesla’s sales in China fell 98% in April amid Shanghi lockdowns

The EV manufacturer sold 1,512 vehicles in mainland China last month, down 98% from March, according to data from the China Passenger Car Association. Tesla’s domestic production also fell 81% to 10,757 vehicles in April, compared with 55,462 in March.

Tesla did not export any Shanghai-made vehicles in April compared to 60 exported in March.

The leap comes as tens of thousands of millions of people in at least 31 cities have been locked in for weeks, causing massive supply chain disruptions and hitting consumer consumption in the world’s second largest economy.

It’s a sharp turn for Tesla after a strong start to the year on the Chinese mainland. Tesla was the top seller of electric vehicles in the country in March, delivering 65,184 cars from its Shanghai factory. This figure rose by 15% from February, as consumer demand for electric cars remains strong even during the pandemic.

Last year, Tesla’s “Gigafactory” in Shanghai exported 484,130 cars, almost half of the company’s 936,000 global deliveries.

But its production and sales got a huge hit in April, when the government closed Shanghai and many other cities to control the spread of the virus.
Tesla’s Gigafactory was closed for weeks last month, and only recently did it succeed in restarting production. But it seems to have hit another chin.
On Tuesday, Reuters reported, citing unidentified sources, that Tesla had stopped most of its production again due to problems with suppliers. The company did not respond to a request for comment.

Tesla CEO Elon Musk tried to downplay concerns about China’s shutdowns.

“I have had talks with the Chinese government in recent days and it is clear that the shutdowns will be lifted quickly,” Musk said Tuesday at a virtual car conference hosted by the Financial Times.

“So I do not expect this to become a significant issue in the coming weeks,” he said.

Shanghai influence

Not everyone shares Musk’s optimism. Shanghai has been under lockdown since the end of March and it is not clear when the restrictions will be lifted in full.

Authorities in the city further tightened restrictions over the weekend after President Xi Jinping promised to “steadfastly” double the zero-Covid policy.

Other automakers also reported a steep decline in sales and production for the last month.

Toyota (TM) said on Tuesday that it has suspended the operation of 14 production lines at eight factories in Japan, from May 16 to May 21, due to lack of parts due to the shutdown in Shanghai.

The company’s global production would be reduced by 50,000 units for May because of that, it added.

“The lack of semiconductors, the proliferation of COVID-19 and other factors make it difficult to look ahead for several months.”

Another Japanese automaker, Nissan engine (NSANY)reported on Monday that its sales in China fell 46% in April compared to a year ago.

“We witnessed a continued impact on vehicle production and sales in April due to ongoing semiconductor shortages, supply chain disruptions and shutdowns in key regions and cities from the spread of COVID-19,” said Shohei Yamazaki, senior vice president of Nissan and chairman of the board. of the company’s management committee for China.

Foreign company urges China to change course on Covid

Overall, China’s passenger car sales fell 34% in April from March, the biggest drop ever, the China Passenger Car Association said.

“As the values ​​of Chinese ADRs and the domestic stock market have both declined and the service sector remains sluggish, people’s incomes have fallen during the pandemic,” the association said. ADRs are securities issued by Chinese companies listed in the United States.

“The purchasing power of the car market has been damaged and the willingness of consumers to buy a car has declined,” it said.

The industry group also acknowledged that there has been a “significant impact” on the supply chains from the shutdowns in Shanghai and Changchun, as the two cities are major production bases for key parts of the automotive industry.

In Shanghai, five major automakers recorded an average 75% drop in production in April compared to the previous month. In northeastern Changchun, major automakers saw their production fall 54% over the same period.

On Wednesday, separate data from the China Association of Automobile Manufacturers, another major industry association, showed that the country’s total car sales fell by 46% in April from March, reaching 1.2 million vehicles. It was the lowest April figure in a decade.

Electric vehicles

But the association expects demand to rise in May as the peak of the Covid outbreak has passed and supply chains are gradually returning to normal.

Retail sales of new energy vehicles – which include electric cars and plug-in hybrids – fell 37% from March, “unlike any other April in history,” the CPCA said. But demand is expected to rise again and remain strong in the short term.

“Under the current environment, self-driving travel has become the first choice. Influenced by high oil prices, more people will choose to buy new energy vehicles,” the association said, adding that sales of electric cars will rise sharply this month from April.

Toyota, Volkswagen and Tesla bring factories in China back online

—CNN’s Tokyo Bureau and Kathleen Benoza contributed to this report.

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