Tesla Faces a Setback in China as Sales Slide to Three-Year Low

This article first appeared on GuruFocus.

Tesla (TSLA, Financials) is hitting turbulence in China. The company sold just over 26,000 vehicles there in October its weakest month in three years as fierce competition and cooling demand took a toll. That's down nearly 36% from a year ago, according to the China Passenger Car Association.

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The drop came right after a strong September, when Tesla's new Model Y L a stretched, six-seat version made specifically for China lifted sales above 71,000 units. But the early buzz faded quickly as domestic carmakers launched new models and offered aggressive discounts.

Tesla's share of the Chinese EV market fell sharply to 3.2% in October from 8.7% the month before. Local rival Xiaomi stole the spotlight, selling nearly 49,000 electric sedans and SUVs in the same month a sign of how quickly China's homegrown brands are closing the gap.

Even so, Tesla isn't standing still. Exports from its Shanghai Gigafactory jumped to a two-year high of 35,491 units in October, suggesting the company is redirecting more cars to overseas markets where demand remains strong.

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