Auto investors were met with some more bad news over the weekend. As many already know, car sales have been on a slump in the past few weeks, specifically as some major markets are returning to lockdowns once again. The main case of this right now is China, with car sales in the country falling dramatically as strict Covid-19 lockdowns are put into place again.
Covid cases are once again rising in China, which has resulted in tight lockdowns in Shanghai as well as the northern province of Jilin. Both areas are major auto manufacturing centers and contain plants owned by a number of American car companies.
Similar to the previous lockdown during the initial stages of the Covid-19 pandemic, disrupted supply chains are a major causality amidst this current China lockdown. Not only has this stalled car and car part imports/exports, but shutdowns have affected manufacturing facilities as well, slowing down the rate at which cars are being made altogether.
The data showed that passenger-car sales fell by 10.5% compared to last year’s figures, down to 1.6 million vehicles. Quarterly sales compared to 12-months ago are also down 4.5%, down to 4.9 million vehicles. The only cars that did well during this time were hybrids, which more than doubled to 1.1 million cars sold compared to last year. This data, which the China Passenger Car Association compiled, is causing a small selloff among American auto makers as of writing.
“The Covid infections have had a tremendous impact on the production of car makers, while consumers are going out less for car purchases,” said association secretary Cui Dongshu in an official statement.
In general, lagging car sales in China are hurting EV makers the most. Obviously, Chinese based EV companies are faring the worst, but even Tesla (NASDAQ: TSLA), whose single largest market is China, has lagged a bit in response to this news. Tesla operates a factory in Shanghai, which has been in the midst of the longest production halt since it started operations back in 2019.
With the city shut down and not likely to change for a while, Tesla made plans to prepare for a situation where the factory remains unoperational until the end of the month, if not longer.
Shares of Tesla were already down 3.0% on Friday but now are down an extra 3.5% in pre-market trading Monday morning. GM is down 1.5% in pre-market as well, as are most big car companies. The worst-performing right now are Chinese EV makers like Nio (NASDAQ: NIO), whose shares are plunging over 8.5% right now.
Tesla Company Profile
Founded in 2003 and based in Palo Alto, California, Tesla is a vertically integrated sustainable energy company that also aims to transition the world to electric mobility by making electric vehicles. It sells solar panels and solar roofs for energy generation plus batteries for stationary storage for residential and commercial properties including utilities. The Tesla Roadster debuted in 2008, Model S in 2012, Model X in 2015, Model 3 in 2017, and Model Y in 2020. Global deliveries in 2019 were 367,656 units. Tesla went public in 2010 and employs about 50,000 people. – Warrior Trading News
