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Tesla’s Chinese Market Share Declines Despite Steady Output

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Published: December 10, 2021
Tesla manufactured roughly 53,000 vehicles last month in China.
Tesla manufactured roughly 53,000 vehicles last month in China. (Image: Blomst via Pixabay)

Tesla’s Shanghai plant continues to churn out vehicles at a steady pace, however, the brand’s market share in communist China has fallen. 

According to Chinese automotive data provider China Passenger Car Association (CPCA), Tesla produced 53,000 vehicles in November, sold 32,000 in the domestic market, and exported the rest to other nations.

“The numbers are OK but exports were lower than I expected. However, we need to wait for production numbers,” Troy Teslike, who specializes in Tesla delivery estimates, tweeted on Dec. 8. The production numbers are expected to be announced between Dec. 13 and 20.

The Shanghai plant has manufactured 55,000 cars monthly for the past three months. Compared to the first half of this year, the monthly average production rate is up by 100 percent. However, Tesla’s share of battery and plug-in electric vehicles during this period slipped to 7 percent when compared to 9 percent in the first half.

“Tesla’s average monthly Shanghai capacity is up about 100% over the past three months. Looking over the second half of 2021, Shanghai capacity is up about 70% compared with the first half of 2021. Chinese EV sales are up about 60% a month on average in the second half, compared with the first half of 2021. So Tesla production has more than kept up, but the need to export has cost Tesla Chinese market share,” Al Root, a senior writer at Barron’s, writes in an article.

Despite unsteady sales in China, UBS analyst Patrick Hummel has reiterated a “Hold” rating on Tesla stock, even increasing the price target to $1,000 from the previous $725. However, he warns that there is downside potential of 6.5 percent.

Hummel expects Tesla to exceed expectations next year. The analyst believes that software is the “next battleground” in the global car industry. No other carmaker comes close to monetizing every day fully automated driving like Tesla. The company’s technology has created the “biggest software-driven revenue opportunity” in the industry, he argues.

New Street analyst Pierre Ferragu maintains a Buy rating on the stock, increasing the target price to $1,580 from $1,298. 

“Multiple strong catalysts in 2022 can drive shares higher in coming months. Those include an upside fourth quarter, strong production from Tesla’s Shanghai facility, new production capacity coming online in Germany and Texas, and new batteries for Tesla EVs,” Ferragu said in a note.

In October, the overall deliveries of electric vehicles had surged by 141 percent; 19 out of every 100 passenger cars sold in China were an EV. Deliveries of new energy vehicles have risen by 191.9 percent year-on-year in the first 10 months of 2021. Local sales are being led by companies like BYD, Tesla, and Wuling.