Tesla in China

Tesla shares fell after the release of data from the China Passenger Car Association on its sales in April. The media reports that Tesla is facing PR problems in the country and has also refused to buy land next to its Shanghai plant.

Tesla (TSLA) shares, down 12.5 per cent since the start of 2021, fell 1.9 per cent on Tuesday amid negative news for the carmaker's business in China and a general decline in the stock market.

While Tesla typically reports its deliveries quarterly, the China Passenger Car Association (CPCA) publishes statistics for every carmaker in the country on a monthly basis.

Tesla sold 25,845 electric cars in April, down 27% from 35,478 in March, but up from 15,484 in January and 18,318 in February. Tesla scandals in China

In addition to seasonality, Tesla's sales in China may have been affected by PR issues, as in April the media raised the issue of Chinese customers' dissatisfaction with the quality and safety of its electric cars. The company's management initially reacted rather indifferently, which was perceived in a negative light in the country. Later, the company apologised and pledged to "work with regulatory authorities to investigate".

The reputational blow to Tesla in China was the accusation that Tesla vehicles were being used for espionage. Without providing any evidence, the Chinese government banned Tesla vehicles from entering military bases in the country.

Experts pointed out that even in the United States, car owners are free to choose whether to include the camera.

CEO Elon Musk also denied any wrongdoing and stressed the importance of maintaining a strong relationship with the Asian economic powerhouse.

In further negative news for Tesla investors, the company has refused to acquire an 80-hectare plot of land across the road from its plant in Shanghai. Experts estimate that building additional workshops on this land would have allowed Tesla to increase production capacity by another 200,000 to 300,000 vehicles.

This suggests that Tesla has no plans to increase production in China, at least in the short term. Tesla's Shanghai plant is designed to produce up to 500,000 cars a year, but it currently produces about 450,000 Model 3 and Model Y vehicles a year.