Tesla Stock Tumbles Again As China Registrations Falter Amid Covid Outbreak

Tesla (TSLA) stock plunged Tuesdayas weekly vehicle registration data out of China suggest the global EV giant’s year-end incentives were not enough to prop up Tesla deliveries.

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Insurance data suggested China’s total new energy vehicle (NEV) sales from Dec. 19- Dec. 25 were about 182,000 units. That’s up 48% compared to last year and a 12.6% increase from the previous week, CnEVPost reported Tuesday. However, despite end-of-year discounts, Tesla registrations fell to an estimated 8,915 on the week. Tesla registrations for the first three weeks of December were 11,670, 12,977 and 10,254, respectively.

As China has eased Covid restrictions, there have been reports of widespread outbreaks of the virus throughout the country. Tesla China and other China-based automakers have now warned deliveries and production could possibly fall due to Covid disruptions.

On Tuesday, Reuters reported Tesla halted production on Dec. 24 at its Shanghai facility. Workers are set to return Jan 1. 2023. Tesla will run production for 17 days in January between Jan. 3 to Jan. 19 and will stop EV output from Jan. 20 to Jan. 31 for an extended Chinese Lunar New Year break, according to Reuters.

A year-end production halt had been widely reported in recent weeks. Tesla’s Shanghai plant had already slowed output earlier in the month, with inventories building up rapidly despite a late-October price cut and substantial year-end incentives.

Tesla, which had previously denied output would be suspended, said the shutdown was for annual planned maintenance.

Tesla stock dived 10% to 110.86 in Tuesday’s trade. Last week, Tesla stock dived 18% to 123.15 after plunging 16.1% in the prior week. Those are the worst weekly losses since the March 2020 Covid crash. TSLA stock is at a 27-month low, down 73% from the November 2021 peak.

Meanwhile, Tesla China competitor Nio (NIO) cut its fourth-quarter delivery guidance Tuesday. China EV giant BYD (BYDDF) has also warned of weaker production due to Covid among staff.

China EV Registrations

Despite Covid, BYD still reported huge, higher weekly EV deliveries last week, even as Tesla and Nio saw week-to-week declines.

In the week ending on Dec. 25, registrations for BYD vehicles came in at 51,636, up from 50,462 and 44,817 in the prior two weeks. BYD said last week that Covid cases among workers is cutting production by 2,000-3,000 vehicles per day.

Nio registration estimates slipped to 2,690 from 3,464. On Tuesday, Nio lowered guidance for Q4 deliveries, citing Covid outbreaks.

The EV startup now expects to deliver 38,500-39,500 vehicles in Q4, well off prior guidance of 43,000-48,000. That implied December sales of 14,263-15,263 — which would still be a record high.

The company said in a statement that it “has been facing challenges in deliveries and productions, together with certain supply chain constraints, caused by the outbreak of the Omicron coronavirus variant in major cities in China.”

China has downgraded the emergency status of its coronavirus outbreak, despite reports that infections are increasing at a rapid rate. China is also ending quarantine rules for inbound travelers, as well as easing airline capacity and international travel restrictions, on Jan. 8.

Fellow China-based EV startup Li Auto (LI) saw registrations improve to 5,155, from 4,558 and 3,013 last week. XPeng (XPEV), another company attempting to mount a challenge to Tesla in China, had 2,536 vs. 3,257 in the prior week.

Tesla Stock: Looking Ahead

Tesla will likely release global Q4 and full-year deliveries on Jan. 2. China EV companies Nio, Li Auto and XPeng will likely release December, fourth quarter and 2022 deliveries data on Sunday, Jan. 1. The Warren Buffett-backed BYD is expected to give its own report in early January.

Over the weekend, Nio unveiled its EC7 coupe SUV, which will likely compete against the Tesla Model Y in the high end market. EC7 deliveries will start in May 2023. Nio also unveiled a revamped ES8 SUV, now on the NT 2.0 platform like its all-new models. Deliveries begin in June.

As analysts are ringing warning bells on the auto industry in 2023, China EV manufacturers have been announcing and bringing out new models while Tesla has  maintained its two model approach in China.

Along with Tesla stock, other China EV manufacturers took early losses Tuesday. Nio stock fell 4.7% before the open. LI stock and XPeng fell more than 1%. BYD stock, which trades over the counter in the U.S., traded up around 1%.

Please follow Kit Norton on Twitter @KitNorton for more coverage.

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