Tesla (TSLA) Stock Falls 4% as Data Showed Shanghai Production Suffered in March

Car sales slumped in China in March as the country’s measures to curb the spread of coronavirus weighed on the automakers’ output, according to the China Association of Automobile Manufacturers (CAAM).

Data show that car sales in the Chinese auto market plunged 11.4% in March from a year earlier to 2.23 million vehicles, even though sales have seen a sharp increase of 18.7% just a month earlier.

"The recent pandemic situation has been quite severe and so the figures in March were not too good, and we currently do not see much improvement in April," said Chen Shihua, the deputy secretary general of the CAAM.

Shihua said the car manufacturers were urging the authorities to provide support through new measures including the reduction of car purchase taxes.

The Omicron variant has spread rapidly across China, urging Beijing to introduce tighter measures and lockdowns, forcing some automakers including Tesla to temporarily shut down their factories.

Tesla (NASDAQ: TSLA) halted production at its Shanghai assembly plant on March 28, followed by Volkswagen which suspended operations at its Shanghai joint venture in April.

Tesla produced just 55,462 cars last month when it was forced to suspend production for two days, just 154 more than in the 28-day long February. By comparison, the EV carmaker manufactured 68,117 units in January.

The new data also showed Tesla delivered 65,814 China-made cars in March; up 16.5% MoM. Strong local demand resulted in Tesla exporting just 60 EV units.

On Monday, Shanghai authorities said the lockdown will be eased in some areas of the city in a bid to revive the city after more than two weeks of strict measures.

The lockdown has significantly affected Shanghai residents, pressuring the city’s authorities to reduce the measures as some people struggle to access food and medicine.

Shanghai now plans to organize residents into three risk categories as a part of its plan to allow "appropriate activity" to those who live in neighborhoods with no Covid cases for two weeks.

"Each district will announce the specific names of the first batch (of communities) divided into the three types, and three subsequent lists will be announced in a timely manner," said Shanghai official Gu Honghui.

He added that the city was divided into 7,624 areas that are still under lockdown measures, while a group of 2,460 neighborhoods is to be reviewed after a week of no fresh infections. The last group of 7,565 "prevention areas" is set to have measures eased after two weeks of no infections.

Tesla stock price is down nearly 4% in pre-open Monday.

By Senad Karaahmetovic

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