Tesla shares fall again as China records falter amid Covid outbreak

TECHNOLOGY
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tesla (TSLA) sank on Tuesday morning as weekly vehicle registration data from China suggested the global EV giant’s year-end incentives weren’t enough to sustain Tesla deliveries.




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Insurance data suggested that China’s total new energy vehicle (NEV) sales from Dec. 19-25 were around 182,000 units. This represents a 48% increase from last year and a 12.6% increase from the previous week, CnEVPost reported on Tuesday. However, despite the holiday discounts, Tesla’s registrations dropped to around 8,915 for the week. Tesla’s registrations for the first three weeks of December were 11,670, 12,977 and 10,254 respectively.

As China has eased Covid restrictions, there have been reports of widespread outbreaks of the virus across the country. Tesla China and other China-based automakers have now warned that deliveries and production could drop due to Covid disruptions.

On Tuesday, Reuters reported that Tesla halted production on Dec. 24 at its Shanghai facility. Workers are expected to return on January 1, 2023. Tesla will run production for 17 days in January, between January 3 and 19, and will halt production of electric vehicles from January 20 to 31 for the Chinese Lunar New Year celebration. , according to Reuters.

The halt in production at the end of the year has been widely publicized in recent weeks. Tesla’s Shanghai factory had already slowed production earlier this month, with inventories building rapidly despite a late-October price cut and substantial holiday incentives.

Tesla, which had previously denied production would be suspended, said the shutdown was for planned annual maintenance.

Tesla shares were down 5.2% early Tuesday in premarket trading. Last week, shares of Tesla fell 18% to 123.15 after falling 16.1% the previous week. Those are the worst weekly losses since the March 2020 Covid crash. TSLA shares are at 27-month lows, 70% below their November 2021 peak.

Meanwhile, Tesla’s competitor in China no (NIO) cut its fourth-quarter delivery guidance on Tuesday. China giant EV BYD (BYDDF) also warned of weaker production due to Covid among employees.

China EV Records

Despite Covid, BYD still reported huge and higher weekly EV deliveries last week, even as Tesla and Nio saw week-over-week declines.

For the week ending Dec. 25, BYD vehicle registrations reached 51,636, up from 50,462 and 44,817 in the previous two weeks. BYD said last week that cases of Covid among workers are cutting production by 2,000 to 3,000 vehicles a day.

Nio’s record estimates have dropped from 3,464 to 2,690. On Tuesday, Nio lowered guidance for fourth-quarter deliveries, citing Covid outbreaks.

The EV startup now expects to deliver 38,500-39,500 vehicles in the fourth quarter, well below previous guidance of 43,000-48,000. This implied December sales of 14,263-15,263 – which would still be a record.

The company said in a statement that it “faces challenges in deliveries and production, along with certain supply chain constraints, caused by the outbreak of the Omicron coronavirus variant in major cities in China.”

China has downgraded the emergency status of its coronavirus outbreak, despite reports that infections are rising rapidly. China is also ending quarantine rules for incoming travelers, as well as easing airline capacity and international travel restrictions, on January 8.

Fellow China-based EV startup Read Auto (LI) saw registrations improve to 5,155 from 4,558 and 3,013 last week. XPeng (XPEV), another company trying to challenge Tesla in China, had 2,536 against 3,257 the previous week.

Tesla Stocks: Looking Ahead

Tesla will likely release fourth-quarter and full-year global deliveries on Jan. Chinese electric vehicle companies Nio, Li Auto and XPeng are likely to release delivery data for December, fourth quarter and 2022 on Sunday, January 1st. expects to present its own report in early January.

Over the weekend, Nio unveiled its EC7 coupe SUV, which is likely to compete with the Tesla Model Y in the high-end market. EC7 deliveries will begin in May 2023. Nio also unveiled a revamped ES8 SUV, now on the NT 2.0 platform as its all-new models. Deliveries start in June.

While analysts are ringing warning bells in the auto industry in 2023, China’s EV makers have been announcing and releasing new models, while Tesla has maintained its two-model approach in China.

Along with Tesla shares, other EV makers in China suffered early losses on Tuesday. Nio shares were down 4.7% before the open. Shares in LI and XPeng fell more than 1%. BYD shares, which trade over-the-counter in the US, rose about 1%.

Follow Kit Norton on Twitter @KitNorton for more coverage.

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