Sales of Tesla’s (TSLA) China-made electric vehicles saw a modest 3% year-over-year increase in August, according to data from the China Passenger Car Association (CPCA). The EV maker’s Model 3 and Model Y vehicles saw a 17% rise in deliveries compared to July. Meanwhile, Chinese competitor BYD (BYDDY) experienced a year-over-year surge of 35.3% in sales, setting a new monthly record with 370,854 units sold in August. This was largely due to its popular Dynasty and Ocean series of EVs and plug-in hybrids.
Other local electric vehicle manufacturers, including Li Auto (LI), XPeng (XPEV), and NIO (NIO), also reported impressive year-over-year sales growth in August. Tesla’s upward sales trend in China, which includes domestic sales and exports to Europe, as well as other markets, has been boosted by ongoing incentives for local buyers and increasing government support.
Why Are TSLA’s Sales in China on an Upswing?
In July, Tesla’s deliveries in tier-three cities soared by 78% year-over-year, while sales in second-tier cities like Hangzhou and Nanjing grew by 47%, according to a Reuters report citing data from China Merchants Bank International (CMBI). Tier three refers to cities that are smaller with less global influence but are quickly growing and urbanizing. In contrast, tier-two cities are larger and more economically developed, with better infrastructure and international exposure. This rise in sales has been driven by the company’s incentives for its customers in China.
Tesla has been offering a financing plan with a zero-interest loan for up to five years since April to attract cautious consumers in an uncertain economic climate. Furthermore, the company has secured endorsements from several local governments, making Tesla vehicles eligible for official car purchases.
In a further boost, China’s top auto industry association confirmed earlier this year that Tesla’s data collection practices in the country are compliant with local laws, allowing Tesla vehicles entry to government compounds where they were previously restricted.
Is Tesla a Buy, Sell, or Hold?
Analysts remain sidelined about TSLA stock, with a Hold consensus rating based on 10 Buys, 14 Holds, and seven Sells. Over the past year, TSLA has declined by more than 10%, and the average TSLA price target of $211.46 implies a downside potential of 1.2% from current levels.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
