The Gigafactory Shanghai, which is the biggest EV production site in the world, is still experiencing a drop in demand. According to China’s CPCA, outbound volumes, including exports, fell by 15% in May to 61,662 units. This marks the eighth consecutive monthly decline from the Shanghai facility and underscores broader global challenges for Tesla’s core EV business.
The slowdown in China is part of a bigger trend. The number of registrations in Germany and the UK has fallen by 36% compared to last year. While Norway and Australia saw growth, thanks to strong Model Y sales in Australia, these are not enough to make up for the overall weakness. According to sales tracker TroyTeslike, Q2 sales could drop by 11% and reach only 395,000 units.
Even though EV sales are down, investors are still very optimistic. Since Tesla’s Q1 earnings disappointed, its stock has gone up 33%, making its market cap $1 trillion, which is more than the total of the next 15 biggest automakers. Analysts believe this is due to optimism about Tesla’s plans for AI-powered robotaxis, which Elon Musk wants to introduce in the U.S. this year.
But, when you look at the basics, the situation is different. The company’s auto business is still responsible for about 72% of its revenue and gross profit. It is concerning because deliveries in Q1 were at their lowest level in three years. In addition, many people are still doubtful about Tesla’s self-driving technology, mainly because Waymo seems to be ahead in the field.
Gary Black, an investor at Future Fund, recently sold his Tesla shares, saying the company’s valuation does not match its actual performance. With two-thirds of Q2 behind us, it seems that hopes for a big increase in EV sales are disappearing. Even if Tesla’s AI story is impressive, its finances could be put under pressure if global demand does not increase.
