Tesla's sales in China fell in February as the country's EV sector began to slow. Beata Saursel—NurPhoto via Getty Images
Elon Musk is no longer the richest man in the world, and China is to blame. Tesla shares fell 7.2% in Monday trading after weak February sales in China, one of the most important markets for the U.S. EV maker. The stock subsequently fell another 2.4% in after-hours trading.
Tesla sold 60,365 Chinese-made cars in February, according to data released Monday by the China Passenger Car Association. This is a 19% decrease from the same period last year and is Tesla's lowest delivery level since December 2022.
U.S. automakers delivered a record number of vehicles in the final quarter of last year, but they still lost their spot as the top EV maker by sales to China's BYD.
China's EV market is slowing after months of rapid growth, hurting other Chinese EV makers. BYD, which recently overtook Tesla to become the world's largest seller of battery electric vehicles, sold 112,311 new energy vehicles (a term that includes both battery EVs and plug-in hybrids) in February. , down more than 37% compared to the same month last year. .
Overall, CPCA estimated that new energy vehicle sales totaled 450,000 units in February, down 9% year-on-year. The association suggested that the Lunar New Year holiday in February may have held back car purchases this year.
But Tesla also faces tough competition from local rivals in the Chinese market, including BYD, backed by Warren Buffett's Berkshire Hathaway, and Chinese EV startup Li Auto. China's EV market is experiencing intense price competition, squeezing profit margins and forcing companies to create more affordable models. CPCA suggested that the price cuts may be causing consumers to adopt a wait-and-see attitude in hopes of further discounts.
Musk promised in January that Tesla could launch an entry-level $25,000 model as early as 2025. The company's entry-level Model 3 costs about $34,000 in China.
Tesla is rolling out its own incentives to boost sales in China. The EV maker announced last week that customers who purchase Tesla's existing stock Model 3 sedan or Model Y sport utility vehicle by the end of March will receive an insurance subsidy of up to 8,000 yuan ($1,111).
Tesla's poor sales in China have taken a toll on Musk personally. The plunge in Tesla's stock was enough to knock Musk from his position as the world's richest man for the first time in nearly nine months. Bloomberg currently estimates the Tesla CEO's net worth at $197.7 billion, compared to Amazon founder Jeff Bezos' $200.3 billion.