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Tesla Faces Headwinds in China as Local Rivals Surge and Deliveries Dip

AInvestMonday, Nov 4, 2024 2:00 pm ET
1min read

Tesla has reported a notable decline in its October vehicle deliveries in China, reflecting mounting challenges in a market where domestic competitors continue to gain strength. According to recent data from the China Passenger Car Association (CPCA), the electric vehicle giant delivered 68,280 Model 3 sedans and Model Y SUVs in China, marking a 5.3% year-over-year decrease and a significant 23% drop from the previous month.

The decrease in deliveries comes amidst an intensifying competitive landscape, primarily from local players such as BYD and XPeng. BYD set a new record in October by reporting sales of 502,657 vehicles, a formidable achievement as it surpassed the 500,000 threshold for the first time. Meanwhile, XPeng also reported a new monthly high, with 23,917 cars delivered in October.

Industry analysts suggest that these figures could pose a threat to Tesla's ambitious target of achieving a new annual delivery record. The challenge is compounded by the fact that Tesla needs to deliver at least 515,000 vehicles globally in the last three months of 2024 to achieve even a marginal increase over last year's total of 1.81 million cars delivered.

Despite the decreasing delivery numbers, Tesla continues to impress with its financial performance. The company’s earnings for the third quarter showed robust profitability, with revenues reaching $25.182 billion, an 8% increase year-over-year. Net income attributable to common shareholders also rose by 17% to $2.167 billion, and operational profit tallied at $2.72 billion, reinforcing Tesla's position as a profitability leader in the electric vehicle sector.

Looking forward, Tesla has plans to broaden its market reach further with the introduction of a new budget vehicle. CEO Elon Musk recently announced the launch of this affordable model, anticipated to be available by the first half of 2025, which could help increase the company's market coverage. The new vehicle, expected to be priced around $25,000, aims to boost Tesla's sales by 20% to 30% next year, possibly aligning with previously teased self-driving innovations.

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