- Wholesale vehicle shipments from Tesla's Chinese factory dropped 6% over the previous April, marking the seventh consecutive year-on-year drop. The nearly 58,500 cars sold at home and abroad is the lowest number overall since 2022, when the factory struggled to operate at full pace amid citywide lockdowns following an outbreak of COVID’s Omicron strain.
Tesla’s seeming reluctance to develop new EV models that can expand the brand into new segments of the global auto market, including compact cars, is coming back to haunt it.
On Wednesday, China’s Passenger Car Association (CPCA) reported figures that showed Tesla shipped 58,459 Model 3 sedans and Model Y crossovers from its GigaShanghai factory last month.
This is 6% fewer than the previous April, which had the same number of working days, and represents the seventh consecutive year-on-year monthly decline. It is also the lowest number overall since 2022, when the factory struggled to operate at full pace amid citywide lockdowns following an outbreak of COVID’s Omicron strain.
As a result, Tesla’s Shanghai operations slid to fourth in the domestic rankings of largest manufacturers of EVs and plug-in hybrids—or “New Energy Vehicles” in China’s parlance—now behind Geely and SAIC-GM-Wuling as well as market leader BYD.
$TSLA 🇨🇳
— Tsla Chan (@Tslachan) May 7, 2025
NEWS: Tesla China recorded 58,459 wholesale in April.
Wholesale=retail+export pic.twitter.com/Tp0sSC5gNR
“Tesla’s hopes for a sustained rebound in China have faded since competition is getting fiercer,” Eric Han, senior manager at Shanghai advisory firm Suolei, told the South China Morning Post. “Its Chinese rivals, banking on their new models and aggressive pricing strategies, have lured more consumers.”
Demand for Tesla EVs is dropping fast—particularly in Europe
Tesla is by no means the only Western company facing difficulty in China’s brutally competitive NEV car market, which is now completely dominated by local brands. But it is the only one worth more than the next 10 largest automakers combined.
Typically the first month of every quarter sees Shanghai set aside anywhere from a third to half its volume for export. Since the wholesale numbers includes cars made both for domestic and foreign markets like Australia, the continued declines signal broader weakness in demand for Tesla.
$TSLA China posted 7.3K insurance registrations for the week of Apr 28 to May 4. Given China holidays from May 1-5, TSLA Giga Shanghai was only open 3 working days last week. After five weeks, 2Q is -9.1% QoQ and -14.5% YoY.
— Gary Black (@garyblack00) May 7, 2025
Separately, the CPCA reported Tesla Shanghai… pic.twitter.com/bL0CRoWNwW
The CPCA did not yet provide an exact split, data which comes later in the month, but weekly insurance figures out of China indicate domestic Tesla sales in the quarter are trending 15% lower so far.
This comes on top of recent data that shows demand for his cars across Europe crashed by 37% in the first quarter and continued to plummet in April.
Musk putting all his eggs in two baskets: Cybercab and Optimus
This might have been blamed on the Model Y changeover to a newer version, which can slow down assembly lines as kinks are worked out. Executives said on Tesla’s Q1 earnings call late last month, however, that all four factories are already able to manufacture the new Model Y at the same pace as the old one.
That suggests the deeper problem is that Musk failed to invest in new cars. He has instead been adamant Tesla doesn’t need to copy automakers by developing different models for different segments, a choice he’s likened to Nokia offering different-size flip phones. Instead Tesla just needs one or two killer products that dominate the market: For Musk, that’s the Cybercab robotaxi and Optimus robot.
To shore up flagging demand in China until this duo can launch, Tesla is believed to be preparing a new lower-cost auto version, according to local media reports. Other unconfirmed speculation centers around the possibility Tesla may be preparing so-called Mini and Maxi versions of the Y, with the latter fully capable of offering seven seats to accommodate parents, grandparents, and children.
Fork in the road for Tesla's eye-watering valuation
Either way, Tesla’s valuation appears to be at a fork in the road, to borrow a favorite Musk metaphor.
Investors are currently willing to pay close to 100 times over for next year’s earnings based on consensus estimates typically indicating the company is primed for explosive growth. This outsized multiple is based on the conviction that Musk’s high-stakes bet on “real-world AI,” robotics and autonomous ride-hailing fleets, will pay off.
Whether Tesla sells 410K, 440K, or 470K cars in Q2 makes financial hardly any difference in the context of a $0.9T MCap company.
— AJ (@alojoh) May 5, 2025
It's also a little ridiculous to obsess about car sales just as robotaxis are about to launch.
It's like obsessing about iPod sales after Jobs…
Bears argue EV sales figures like those out of China or Europe proves he’s woefully neglected his core car business and trashed his company’s brand. They doubt his AI efforts will be able to justify the kind of valuation of which other Magnificent Seven stocks can only dream.
Bulls believing the company is worth more than its current $900 billion market value meanwhile pay little heed to the EV business, believing its cars are Tesla’s equivalent to the iPod—a product that ultimately became obsolete once Apple launched the iPhone.
AI and robotics now represent the linchpin in Musk’s equity story.
