(CapitalWatch, Oct. 12, New York) Tesla Inc. (Nasdaq: TSLA) rallied on Tuesday on another month of record China sales even as the nation's auto market slumped overall.
Tesla delivered 44,264 EVs to Chinese consumers in September, the vast majority of the 56,006 cars it produced in Shanghai, according to the China Passenger Car Association cited by Reuters. The results beat analyst expectations by about 20,000 units – and sent shares in Tesla up 2% intraday Tuesday, to $808.08 apiece.
Overall, September shipments of China-made Teslas increased 27% month-over-month; in August, the company broke earlier records with sales of 44,264 units, of which 31,379 were exported.
The sales surge made up for the earlier worries. In July, the company sold 8,621 cars in China and exported 24,347 from its Shanghai gigafactory, which critics interpreted as an ominous sign. After a massive 285,000-units recall on a cruise control safety issue and some buyers' protests over the vehicles' poor quality, analyst Gordon Johnson said Tesla "has overbuilt Chinese capacity," as cited by CNN Business.
However, Tesla's orders are still backed up with a wait time and, as Bloomberg reported, the company prioritizes overseas markets in the first half of the quarter. Meaning, the domestic sales of China-made cars in July and August were deliberately kept low – and the months of October and November will see weaker China sales.
September deliveries also showed how far Tesla's U.S.-listed competitors in China fall behind. Earlier this month, Nio Inc. (NYSE: NIO), XPeng Inc. (Nasdaq: XPEV; HKEX: 9868), and Li Auto Inc. (Nasdaq: LI; HKEX: 2015) each reported delivering about 25,000 units in the three months through September – and that's including overseas shipments.
Tesla makes Model 3 and Model Y in Shanghai, having built its Gigafactory in just one year and rolling off the first vehicle in 2020. CEO Elon Musk said recently that production in China has already surpassed Tesla's Fremont factory output.
Tesla's impressive results came against the backdrop of China's waning auto market. As NEV sales more than doubled to 357,000 units from a year ago, the China Association of Automobile Manufacturers (CAAM) recorded a 17% year-over-year drop in auto sales overall in September. Year-to-date, China's auto market still beat the first nine months of 2020 by 8.7%.
China's EV industry continues to face several headwinds, including chip shortage, supply chain disruptions, and raw materials constraints. In addition, regulators in Beijing are reviewing user data collection in smart cars. The country has long prohibited the transfer of Chinese data overseas and a new law went into effect this month under which automakers must get a green light from the watchdog before exporting driver data. Now, the industry awaits details of the review process.
Earlier this month, Tesla said it produced 238,000 vehicles and delivered more than 240,000 in the third quarter. The company's Q3 financial performance is scheduled for release on Oct. 20.