Tesla Sales For Model 3 Down? Problems Seen In China
Tesla's Model 3 sedans fell short in China. The issue has centered around the misprinting of labels. Thus, the country's customs authorities have already accepted the electric car company to solve the problem with their clearance.
The shares of Elon Musk's company in Silicon Valley fell more than 5% in the early trading. This is after the Chinese media reported that the Shanghai customs had suspended the clearance for a specific batch of Tesla's cars. The last report shows that it went down to 1.3% that has an amount of $281.73.
spokesperson from Tesla said that "We have already reached a resolution with Chinese customs. We are working closely with them to resume clearance procedures on these vehicles. Sales of Model 3 in the country are not impacted, and we continue to deliver Model 3 vehicles that have already been processed," according to BBC.
The world's largest electric vehicle market making inroads into China is crucial for Tesla. As it seeks to compensate for softening demand in the United States. The company also needs to convince investors of its ability to become steadily profitable. Daniel Ives an analyst from Wedbush Securities said that "Selling into China has clear hurdles and this is a reminder of the pitfalls when betting on growth in the region."
Elon Musk has played up the support, Tesla is getting from the Chinese authorities. As the company invests in the country's first wholly foreign-owned car plant in Shanghai. It is due to come online later this 2019.
Meanwhile, Tesla has to import the US made cars with substantial customs duties. The electric car will be put on a disadvantage as it will be taking against the government subsidized, locally-made electric vehicles. Its rivals are Byton, XPeng Motors, and Nio Inc.
It has been first reported by the financial publication Caixin about China's customs authorities blocking the electric cars. It has a total 1,171 of Model 3 sedans arrived at the north China's Tianjin Port. 84 of the said cars were imported by the port in February. The first shipment arrived in Shanghai on February 22 and the deliveries started at the end of the month as per news in China, according to Reuters.
Furthermore, Tesla's Shanghai Factory made possible by raising funds from local banks at a low-interest rate. The plans to start making the Model 3 at the end of this year. The company will eventually produce cars at the rate of 10,000 per week.