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Piper Sandler told clients that car sales in China in November implied a slowdown in car sales for the year, which explained rumors of a production cutback by Tesla.Nasdaq: TSLA) on the market.
Equity analyst Alexander Potter told clients COVID restrictions are evident in slide sales for the month. Tesla, in particular, made a big profit year-on-year, Spread of NEVs In the region, the Austin-based automaker is still seeing declining sales. double digit percentageOverall retail vehicle sales fell 9.5% year-on-year, slowing for the first time since spring lockdowns.
“November results show annual sales of just 17.2 million vehicles. It has been nine years since China’s auto market has experienced such a low annual rate (due to the impact of COVID lockdowns). ),” explained Potter. “December is typically the strongest month, accounting for 10.9% of annual sales, so widespread production cuts may be necessary if the recent downward trend is not addressed by easing COVID restrictions. there is potential.”
He added that the year-on-year decline in retail sales was the first in both October and November, two of the strongest months of the year since 2008. It makes sense, and it might be a smart move for Tesla to pursue.
Read more about why Potter doesn’t see competition as a driver of Tesla’s curtailed production.