The Chinese auto market slumped in November, with an overall drop in sales across the market. Although, Tesla Gigafactory Shanghai posted record numbers during the same month. Some say the news shows Tesla’s electric vehicle dominance in what is the world’s largest auto market, while others are pointing to the automaker’s plans to cut some production in December.
Tesla’s Giga Shanghai delivered 100,291 vehicles in November to mark the automaker’s highest monthly sales yet in the country, according to data shared by the China Passenger Car Association (CPCA). The figure includes only local deliveries, and it comes just a few weeks ahead of plans to slow down production at the Shanghai plant.
Tesla’s deliveries in China during the month of November were made up of 69,098 Model Y units and 31,193 Model 3 units. Giga Shanghai also exported 37,798 vehicles in November, which landed Tesla the title of the top “new energy vehicle” exporter in China. In the auto market as a whole in November, auto retail sales dropped 9.2 percent year over year and 10.5 percent from October.
Although the news comes amidst concerns over Tesla’s demand in China, if November is an indicator of demand, it’s at least selling better than most of the rest of the Chinese auto market.
It was reported a few weeks ago that Tesla would be substantially cutting production in December. The automaker responded by saying those rumors were “untrue” in a statement, but not elaborating or indicating what exactly was untrue about the reporting. Days later, it was reported that Tesla plans to shorten shifts by around two hours in December and that the company will delay some of its onboarding for new hires.
Piper Sandler analyst Alexander Potter said he doesn’t think Tesla will cut production as a result of decreasing demand, though it may do so for other reasons. Potter also highlighted Tesla’s sales in comparison with the overall market, emphasizing that the U.S. automaker’s performance was impressive — given that the Chinese auto market declined in both October and November, which Potter says are both typically high-sales months.
Tesla to suspend Shanghai factory output later this month. Video: Bloomberg / YouTube
Still, Potter expects more challenges ahead for Tesla, citing continued COVID-19 constraints as one significant barrier.
“December is typically the strongest month of the year, historically accounting for 10.9% of full-year sales [in China], so if recent downward momentum isn’t addressed through loosening COVID restrictions, then widespread production cut may be necessary,” Potter said. “In this context, it’s easier to understand recent murmurs re: lower production at Shanghai Gigafactory.”
Tesla’s Giga Shanghai production and sales remain important details for the company, especially amidst emerging competition. However, with China’s auto market currently facing a widespread sales drought and Tesla still breaking monthly sales records, it’s worth questioning whether recent demand concerns may have been overstated.
Originally posted on EVANNEX. Written by Peter McGuthrie.
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