Some 1.18mln passenger cars were bought in the People’s Republic in February, which was up more than fourfold on a coronavirus-hit period a year ago, with sales of 97,000 electric vehicles being more than seven times higher than a year earlier.
But EV sales were down 38% compared to January, data from the China Passenger Car Association showed. February included seven days of the Lunar Festival and Chinese New Year, when most companies are required to take a holiday.
Tesla sold 18,318 of its locally made Model 3s and Model Ys during the month, which was up 18% on the preceding month, helped by price cuts.
This came as Chinese car manufacturers Nio (NYSE:NIO), BYD (OTCMKTS:BYDDF), Xpeng (NYSE:XPEV) and Li Auto (NASDAQ:LI) all sold fewer cars month-on-month in February.
The US carmaker produced around 23,600 Model 3/Y in about the 20 days that Gigafactory Shanghai was operating during February in China, with some of these cars shipping to Europe.
Tesla’s shares have crashed by a third since the start of February to US$563 one of the worst victims of a wider Big Tech sell-off. But the shares were up 7% in pre-market trading on Tuesday.
China sales for Tesla appear to be on a strong trajectory into March and in line for at least 200,000 sales for the whole year, said US broker Wedbush.
“Considering the Lunar New Year in China which took up a portion of February, we would characterize these February results as quite impressive and ahead of Street expectations.”
Delivering more than 200k units in China for the year is a “linchpin” for Tesla boss Elon Musk to hit his 750-800k annual target, the Wedbush analysts said.
With the domestic carmakers seeing a sequential slide, while Tesla was up, this was “a major directional swing in share shift”, the broker added.
“We believe price cuts and the Model Y introduction were key to some of these changing market dynamics in China.
“That said, overall EV demand in the region looks robust with EV penetration set to go from 4.5% in China for 2020 to 10% by 2022 in this EV arms race with Tesla and its Giga footprint front and center.”
With EV stocks and Tesla shares being brutally sold off in recent weeks, Wedbush said the February demand numbers “are key and speaks to our confidence that overall Tesla is poised to gain considerable market share in the key China region over the coming years”.