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Tesla\u2019s August car sales in China were higher than in any other month so far this year, but the company is still losing ground to domestic brands in the world\u2019s largest and fastest-growing car market.<\/p>\n
Its share of the so-called New Energy Vehicles market\u2014which includes plug-in hybrids and hydrogen fuel cell cars alongside pure electric vehicles\u2014has dropped to 6.5% in the first seven months of this year. This is down from almost 9% a year earlier, according to a report by Shanghai consultancy Automobility\u00a0cited<\/a>\u00a0in the\u00a0Financial Times<\/em>.\u00a0\u00a0<\/p>\n In a social media post, Musk called the report \u201csilly,\u201d but did not directly dispute the reports findings.\u00a0<\/p>\n \u201cOur Shanghai factory is running at max capacity,\u201d he wrote.\u00a0<\/p>\n While the latest weekly figures coming out of China indicate Tesla may be on track for a record quarter in China, this is only after a disappointing first half during which sales declined.\u00a0<\/p>\n On Monday, fresh data from the China Passenger Car Association (CPCA) indicated that Shanghai exported around 23,250 cars out of 86,700 made in August, implying domestic sales of nearly 63,500.\u00a0<\/p>\n This would make August the best month so far this year for Tesla, but Chinese EV publication CnEVPost<\/em>\u00a0calculated<\/a> this still means a year-on-year drop of 1.9% and flat domestic sales of 388,000 in total through the first eight months.\u00a0<\/p>\n Musk did not respond to a Fortune<\/em> request for comment to clarify his remarks.<\/p>\n China\u2019s domestic NEV market is expected to\u00a0surpass 1 million vehicles in August<\/a>, the first time a single month has crossed that threshold and more than the previous monthly record of nearly 950,000 in December of last year. According to preliminary data from the CPCA, this amounts to growth of 42% over the previous year\u2019s August total. Over the cumulative first eight months, NEV sales hit 6 million for a 35% gain.\u00a0<\/p>\n However, demand has shifted away from pure EVs. For example, Tesla\u2019s arch-rival BYD<\/a> reported at the start of this month that the bulk of its volume growth both in August and year-to-date\u00a0came from plug-in hybrids<\/a>.\u00a0<\/p>\n With nothing to offer in this category, Tesla had to\u00a0slash production in April<\/a>\u00a0to reduce pressure on inventories of unsold vehicles. Sales have now begun to rebound after it launched 0% financing, but growth so far this year has been flat overall.<\/p>\n Tesla\u2019s business is largely based on exports from Shanghai. More than half<\/a>\u00a0of all Tesla cars built globally are manufactured in Shanghai, with about a third of its volume destined for export.\u00a0And according to the company\u2019s quarterly investor deck, Shanghai can build more than 950,000 units of the Model 3 and Model Y combined, or a monthly volume of roughly 80,000 vehicles.\u00a0<\/p>\n Unfortunately for Tesla, sales could now suffer collateral damage from a backlash against Chinese EV manufacturers, who have been pushing into overseas markets amid a cooldown in economic growth and a brutal price war that Musk himself helped launch.<\/p>\n Recently, the EU slapped an\u00a0extra 9% import duty<\/a>\u00a0on Musk\u2019s made-in-China cars as part of a wider crackdown that hit other manufacturers even more steeply. Every Model 3 sold in the EU single market is imported from Shanghai. Canada has also imposed an extra tariff on Chinese EVs that effectively makes Tesla\u2019s export from Shanghai prohibitively expensive.<\/p>\n<\/div>\nShift away from EVs towards plug-in hybrids<\/h2>\n
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