Shares of Tesla reached $272 in pre-market trading, reverting to their previous position before the election. Sales in North America and Europe have declined, while expectations for strong sales in China seem unfounded.
According to the China Passenger Car Association, Tesla sales in China dropped to 30,688 in February, marking a 49% decrease from 63,238 in the same month last year. Additionally, sales in Australia fell dramatically by 71.9% in February, totalling only 1,592 units sold.
Tesla Faces Declining Demand
This data signals a downturn in demand, one that aligns with the broader slowdown observed across multiple regions. Tesla’s declines in North America and Europe are now reinforced by underperformance in China, a market where robust growth had been widely expected. The latest figures from the China Passenger Car Association point to a near-halving of sales compared to a year ago, an outcome that will weigh on overall revenue. A similar pattern has emerged in Australia, where deliveries have tumbled, reinforcing concerns that demand outside of Tesla’s core U.S. market is weakening.
With shares recovering to levels seen before the election, the market appears to have factored in these trends, at least for now. However, a key issue is whether expectations have sufficiently adjusted to reflect recent sales figures. If demand in China continues to disappoint following a period of aggressive price reductions, further downgrades to revenue forecasts may follow. Such developments would make any sustained recovery in share price more challenging.
Beyond immediate sales figures, attention must also be directed towards production and delivery numbers in the coming weeks. Factory output adjustments could reveal Tesla’s own expectations for demand going forward. If further production cuts become necessary, markets will have to re-evaluate growth expectations once again.
Economic Conditions And Market Sentiment
Another element influencing sentiment will be broader economic conditions. Consumer appetite for electric vehicles remains sensitive to interest rates and overall financial confidence. Any signs of slowing consumer credit growth or weaker economic activity could further weigh on projections. Recent sales figures already reinforce the idea that Tesla’s pricing power is under pressure, making any further deterioration in demand a potential trigger for additional adjustments from analysts.
Ultimately, it will be necessary to monitor whether China’s downturn represents a short-term fluctuation or a more drawn-out shift in buying patterns. If sales fail to stabilise in key international markets while competitors maintain or expand their foothold, the pressure on Tesla’s valuation may intensify.
