Shares of Tesla Inc. (NASDAQ: TSLA) dropped by more than 5% today after the release of a news report by The Information that said, “monthly net orders in China dropped to about 9,800 in May from more than 18,000 in April.”
China is the largest electric vehicle (EV) market in the world so investors see it as critical to the growth of Tesla over the next few years. The company’s Shanghai factory has a capacity to produce around half a million vehicles each year but it is running at well under total capacity.
Are you looking for fast-news, hot-tips and market analysis?
Sign-up for the Invezz newsletter, today.
Tesla’s stock price is down more than 20% year-to-date while still being up more than 230% for the trailing one-year period after a stellar run in the stock last year. In comparison, the Nasdaq Composite Index is up 7% year-to-date and 42% over the last one year.
Tesla is facing a public relations nightmare in China
The U.S.-based EV maker has received a lot of negative press in the recent months after some reports of car crashes, battery explosions and quality complaints from the Chinese customers.
The company is also facing increasing scrutiny from the Chinese regulators. The country has restricted the use of Tesla cars by its military and state personnel over concerns that the cameras on its cars could be used for spying.
Tesla was labelled ‘arrogant’ and ‘overbearing’ by the the state-backed tabloid Global Times after a much publicized spat between the company and one of its customers.
Analyst’s take on the situation
CEO of JL Warren Capital, Junheng Li, in an emailed response to CNBC, said:
“We see a definitive material impact on Tesla branding, orders and deliveries for future months, although it’s hard to quantify exactly to what extent the declining demand is driven by concerns on Tesla’s safety features, or rising competition especially from Chinese automakers.”
67% of retail CFD accounts lose money
- Lions Club welcomes Soap Box Derby racers
- Sushant Singh Rajput First Death Anniversary: Fans from Australia to mark the date with THIS special gesture for the star [Exclusive] | Bollywood Life
- 12 killed, 138 injured in gas explosion in Central China – Times of India
- This DST-backed wastewater treatment technology to reduce costs for low, medium scale enterprises