Elon Musk’s reign as the world’s richest person has come to an end, and the culprit is none other than China. The setback came as Tesla shares experienced a sharp 7.2% decline in Monday’s trading session, directly influenced by disappointing February sales figures in China, a crucial market for the U.S. electric vehicle (EV) maker. The downward spiral continued with an additional 2.4% drop in extended trading.
According to data released by the China Passenger Car Association (CPCA) on Monday, Tesla sold 60,365 vehicles manufactured in China in February. This marked a significant 19% decline compared to the same period last year and represented the lowest level of deliveries since December 2022.
While Tesla achieved record-breaking delivery numbers in the final quarter of the previous year, it was dethroned as the top EV seller by China’s BYD. This shift underscores the slowing momentum in China’s EV market, which had experienced rapid growth in previous months. BYD, now the world’s largest seller of battery electric vehicles, recorded a sharp decline of over 37% in new energy vehicle sales compared to the previous year, selling 112,311 units in February.
The overall new energy vehicle sales in China also witnessed a 9% year-on-year drop in February, as estimated by the CPCA. The association attributed this decline partly to the Lunar New Year holiday, which coincided with February this year, potentially dampening consumer spending on automobiles.
In addition to market factors, Tesla faces stiff competition from local rivals like BYD and Chinese EV startup Li Auto. A fierce price war within China’s EV market is exerting pressure on profit margins, prompting companies to introduce more affordable models. The CPCA suggested that price reductions might be influencing consumer behavior, leading them to adopt a wait-and-see approach in anticipation of further discounts.
To counteract its declining sales in China, Tesla has implemented various incentives, including insurance subsidies of up to 8,000 yuan ($1,111) for customers purchasing existing inventory Model 3 sedans or Model Y sports utility vehicles by the end of March.
The impact of Tesla’s faltering China sales extended beyond the company’s stock price, affecting Musk personally. The decline in Tesla shares stripped Musk of his title as the world’s richest person for the first time in nearly nine months. Bloomberg now estimates Musk’s net worth at $197.7 billion, trailing behind Amazon founder Jeff Bezos, whose fortune stands at $200.3 billion.
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