Updated at 10:00 am EST
Tesla (TSLA) – Get Tesla Inc Report shares slumped lower Monday after data showed car sales in China fell for the first time in three months as the country’s ‘zero Covid’ policy shutters factories and limited consumer and business activity in the world’s largest auto market.
The China Association of Automobile Manufacturers said March sales fell 11.7% from last year to 2.23 million units, a notable slump when compared to the near 19% gain recorded over the month of February.
Tesla, which relies on both China sales and production of its Shanghai gigafactory ahead of ramp-ups at new production facilities in Berlin and Austin, produced 55,462 units in March, compared to 55,308 in the Lunar New Year-shortened month of February and 68,117 to start the year in January.
The carmaker is also in the throes of a weeks-long closures of its Shanghai factory, which has been dark since March 28 as restrictions on travel in and out of the city intensify.
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China, the world’s biggest energy importer, could look to an extended lockdown of some of its biggest cities this week, including Shanghai, as part of its failed effort to enforce a ‘zero Covid’ policy as cases surge and hospitalizations begin to rise.
China stocks fell the most in a month Monday, while the yield on benchmark 10-year government bond yields fell below their U.S. Treasury counterparts for the first time in twelve years Monday as investors worried about the impact of Covid policies on growth in the world’s second-largest economy.
That said, Tesla still managed to sell around 182,174 China-made cars over the first three months of the year — including 65,814 in March — most of which were bound for export to markets in Europe and Asia, and it has largely absorbed the impact of the delayed opening of Tesla’s Berlin gigafactory and supply chain disruptions that have hindered production in California.
Tesla shares were marked 3% lower in early trading Monday to change hands at $994.75 each.
Tesla delivered 310,048 new cars over the three months ending in March, the company said in a statement, up 67.8% from last year but just 0.5% higher than the 308,600 reached in the final three months of last year.
Production actually fell, however, to 305,407 vehicles compared to the 305,840 tally recorded over the final three months of last year, thanks in part to supply chain disruptions and Covid-related closures at its Shanghai factory.
Tesla will also publish earnings for the three months ending in March on Wednesday April 20, with early indications suggesting analyst are looking for revenues in the region of $17.57 billion, up 68.3% from last year and profits of around $2.24 per share.