Tesla Stock Is Dropping Again. Now It Might Have a China Problem.

Tesla China

Tesla (ticker: TSLA) sold roughly 26,000 EVs in April in China, down from about 35,000 in March, according to multiple reports citing data from a Chinese auto industry association.




A decline in sales isn’t the news investors want to hear. Chinese EV competitors NIO (NIO),XPeng (XPEV), and Li Auto (LI), for comparison, delivered more EVs in April compared with March. That trio delivered almost 18,000 vehicles in China in April, up from about 17,000 in March.
Tesla shares slid 6.4% in premarket trading. Shares also fell 6.4% Monday to close at $629.04 as the recent tech rout worsened, with the Nasdaq Composite falling 2.6%. Other EV stocks dropped significantly as well. Fisker(FSR) shares fell 9% Monday, while NIO shares dropped 8.2%.China is important for Tesla and all other EV makers: It’s the largest market for new cars in the world, as well as the largest market for electric vehicles. Wedbush analyst Dan Ivesexpects China to represent 40% of Tesla deliveries in 2022.



Ives sounded a note of caution about the April figures in a Tuesday report. “Musk & Co. need to play nice in the sandbox with Beijing and smooth out PR issues in the region which have been a black eye for Tesla over the last month,” wrote the analyst. Tesla has faced some increased scrutiny in China recently over its handling of customer complaints and security of data gathered routinely by Tesla vehicles on the road.Still, Ives maintained his Buy rating and $1,000 price target for Tesla stock.

Meanwhile, GLJ analyst Gordon Johnsonbelieves the April decline signals a growing market share problem for Telsa, and that Tesla competitors are staring to eat into its market position.



“At risk of stating the obvious, this is a very troubling development,” wrote Johnson in a Tuesday email to clients. Of course, Johnson is far from bullish. He rates shares Sell and has a Street-low $67 price target for shares.

Year to date, coming into Tuesday trading, Tesla shares are down 10.9%, trailing behind comparable gains of the S&P 500 and Dow Jones Industrial Average. Still, shares are up 288% over the past 12 months.

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