(Bloomberg) --Tesla Inc.'s Shanghai factory deliveries slipped in October, the unexpected softness coming after a record quarter for China shipments at Elon Musk's carmaker.
The US electric vehicle maker shipped 68,280 Model 3 sedans and Model Y sport utility vehicles last month, down 5.3% year-on-year and a sharp 23% contraction from September, preliminary data released Monday by the China Passenger Car Association show.
Tesla's October performance in China — a crucial market for the company — may deal a blow to its guidance of delivering a record number of EVs this year. The sales slip is a rare outlier considering peers like BYD Co., Xpeng Inc. and Geely Automotive Holdings Ltd. all posted record sales in Asia's biggest automobile market last month.
It's also reflective of the stiff competition Tesla is facing in China, particularly from homegrown champion BYD, which saw its revenue surpass Tesla's for the first time in the third quarter. Tesla remains more profitable however, with net income of $2.2 billion in the third quarter compared to BYD's 11.6 billion yuan ($1.6 billion).
Tesla will have to sell a record number of EVs globally in the final three months of 2024 — at least 515,000 units — to make good on its guidance of “slight growth” in annual sales versus last year's 1.81 million deliveries. China accounted for over half of Tesla deliveries worldwide in the third quarter.
China's car market more broadly continued to bounce back in October, fueled by a surge in deliveries of EVs and hybrids, as automakers race to meet annual sales targets.
Overall, vehicle shipments grew 4.5% to 2.11 million units, while sales of EVs and plug-in hybrids jumped 50.9% from a year earlier to 1.12 million units, the data show. EVs and hybrids made up about 53.3% of October's total sales.
Last month's week-long national day holiday saw crowds throng car showrooms after the government unleashed a multi-pronged economic stimulus package. That was on top of a 20,000-yuan subsidy from a government program aimed at encouraging people to trade in their combustion engine cars or older EVs.
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