Tesla China shipments tumble, the latest sign of weakening demand

Tesla (TSLA) shipment data out of China is not good, and the latest piece of bad news for the pure EV-maker.

The China Passenger Car Association (CPCA) reported Tesla’s shipments from China fell to 30,688 in February, plunging 49% compared to a year ago, per Bloomberg News, and down more than half compared to January (63,238). Meanwhile, the wholesale sales of new energy vehicles in China for the month hit 840,000 units, up 82% compared to last year.

Tesla stock dropped over 7% in early trade and is down over 30% for the year.

Tesla’s shipments from China account for a mix of domestic purchasing, as well as export for other territories, meaning pure domestic sales of Tesla EVs may be worse. Typically January and February are slightly weaker sales months in China due to the Lunar holiday, but Tesla’s sales dip comes as February sales in the region were higher.

The CPCA notes that consumer preferences in China have shifted toward electrified vehicles like hybrids and pure EVs, indicating stronger demand for those vehicles. In addition, the trade group notes that the rise of DeepSeek and other AI technologies can be integrated cheaply into car cockpits and are popular with consumers.

Tesla has struggled with getting its autopilot and FSD (full-self driving) tech in China due to regulatory and data privacy concerns. Tesla only recently rolled out a limited version of autopilot in China, and it has been plagued with various issues.

Weakness in China, one of Tesla’s largest sales regions, is a deep concern for the company, and comes after European sales tumbled as well.

Bank of America analyst John Murphy slashed his price target for Tesla to $380 from $490, citing those weaker European sales and “sentiment on the brand potentially souring,” among other reasons.

Tesla CEO Elon Musk’s political activities seem to be affecting his — and Tesla’s — standing both in Europe and the US. However that effect is not as pronounced in China, where Musk typically is looked at favorably.

But Musk’s connections to the White House could become a hindrance, as there is speculation the Chinese government may withhold full FSD approval in China as a bargaining chip in tariff negotiations with the White House, as reported by the FT. The White House just doubled its tariffs on Chinese goods to 20% this week.

Political issues aside, Tesla’s troubles in China likely come down to more market-based forces: domestic automakers like BYD and others are making cheaper products that are well-liked and include technology like autonomous driving features that Tesla can’t match.