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Tesla’s sales in China nosedived by 70 percent last month in the latest demonstration of the adverse impact the U.S.-Chinese trade war is having on business. The news, from the Chinese passenger car association as reported by Reuters, comes a few days after the carmaker said it plans to cut its prices for the Chinese market.
China is a key market for Tesla where it plans to build a gigafactory, and last month it only sold 211 cars there, according to the association’s data. A price cut makes sense amid continued trade tension between Beijing and Washington, and a speeding up of the gigafactory plans would also make sense. Tesla also plans to move some production to China.
The company last month said it was launching pre-orders for its affordable model, Model 3, in Europe and China before the end of this year and added it was considering moving the production of some Model 3s to China next year. “We are aiming to bring portions of Model 3 production to China during 2019 and to progressively increase the level of localization through local sourcing and manufacturing,” Tesla said in its third-quarter earnings report. The cars manufactured in China would be sold in China, Tesla also said.
Separately, earlier this week chief executive Elon Musk admitted the company had been on the brink of collapse because of the delays in the Model 3 production ramp up.
“Tesla faced a severe threat of death due to the Model 3 production ramp. Essentially, the company was bleeding money like crazy and if we didn’t solve these problems over a short period of time we would die. It was extremely difficult,” Musk said in an interview with Axios on HBO.
The money bleeding was certainly no secret at the time Musk talked about—spring this year—but somehow the company managed to turn things around quickly enough to not just avoid death by money bleeding, but even to turn in a profit for the third quarter of the year.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.