Al Root and Adam Clark
Tesla looks set to produce a new variant of its most popular vehicle, which could help the electric vehicle maker compete with fast-growing rivals in China.
That had shares rising in early Tuesday trading. But weaker-than-expected manufacturing data knocked down many shares on Tuesday, including Tesla.
Reuters reported Tuesday that Tesla is planning to produce a six-seat variant of its Model Y car in China starting in late 2025 and has asked suppliers to prepare for an increase in output at its Shanghai factory.
Tesla didn't respond to a request for comment.
Tesla makes a five and seven-seat version of the Y in the U.S. It only offers the five-seat version in China. What percentage of Model Ys sold in the U.S. are seven-seaters isn't readily available.
Adding a new version of a popular model can help boost sales. Investors were pleased and Tesla stock was up almost 2% in early trading.
But the report wasn't enough to overcome weak manufacturing data. The Institute for Supply Management's Purchasing Managers' Index, a key gauge of U.S. manufacturing activity, came in at 47.2 for August. Economists surveyed by FactSet expected a reading of 47.5. A number above 50 indicates growth. The August reading marks the fifth consecutive month of contraction.
Tesla stock finished down 1.6% at $210.60. The S&P 500 and Dow Jones Industrial Average fell 2.1% and 1.5%, respectively. Shares of General Motors and Rivian Automotive fell 2.8% and 6.9%, respectively.
Tesla sales could use a boost. The Y is one of the best-selling cars in the country -- electric or traditional -- but Tesla sales growth in China and around the globe has slowed in recent months.
In the first half of the year, Tesla sold about 831,000 vehicles around the globe, down about 7% year over year.
Tesla doesn't report monthly or regional sales, but analysts get data through industry sources. Through July, Tesla sold about 325,000 vehicles in China, flat with the same period in 2023.
Tesla sold 86,697 China-made cars in August, according to preliminary data from the China Passenger Car Association (CPCA) on Monday -- up about 3% year over year. That is a wholesale number and includes cars exported out of China. Tesla exports roughly one third of the output from its manufacturing plant in Shanghai.
The CPCA will release retail sales data for China later in the month.
Through July, total battery-electric vehicle production in China was up about 7% year over year. Many of Tesla's peers have posted better growth. Li Auto delivered about 240,000 vehicles, up almost 39% year over year. BYD sold 1.9 million vehicles, up almost 30% year over year. BYD sells both all-electric and plug-in hybrid models. Its battery-electric sales through July totaled some 856,000 vehicles, up about 14% year over year.
Through Tuesday's trading, Tesla stock was down about 15% this year. Shares have lagged behind the market as investors worry about growth.
Write to Al Root at allen.root@dowjones.com and Adam Clark at adam.clark@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
September 03, 2024 17:27 ET (21:27 GMT)
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