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The drop was the first month-on-month decline in sales of Tesla’s China-made cars since December, when it struggled with rising inventories.
Tesla sold 64,285 China-made electric vehicles (EVs) in July, up 128% from 28,217 a year earlier when a scheduled upgrade to its Shanghai factory curbed production. It has been a tradition for Tesla to upgrade production lines during the summer heat.
Its Chinese rival BYD, with its Dynasty and Ocean series of EVs and petrol-electric hybrid vehicles, posted a 61% year-on-year rise in July sales to 261,105 passenger vehicles, including 18,169 which were exported, according to BYD.
Tesla has prioritised sales growth over profit this year, firming its popularity in the world’s largest auto market even though Chinese brands for the first time took more than half of their home market in sales terms in the first half.
Tesla slashed prices at the start of the year, initiating a price war with 40-plus brands in China who followed suit.
It offered new cash bonuses on top-selling models in China in July, as part of a global customer referral incentive, kicking off a new round of price cuts as General Motors (NYSE:GM) and Volkswagen (ETR:VOWG_p) followed.
Tesla was the only foreign brand to increase its market share in the country in the first half, according to Chinese industry data. Its China deliveries hit a record 156,676 cars in the second quarter.
Still, BYD outsold Tesla China by 29% in EV sales in the first half while its lower-priced Dolphin EV outsold Tesla’s Model 3, which is expected to be revamped in September.
Chinese EV startups such as Nio (NYSE:NIO) and Xpeng (NYSE:XPEV) also saw their deliveries rebound in July as they ramped up deliveries of newly launched SUV models ES6 and G6.
China wants to boost sales of automobiles and other big-ticket items as its post-COVID-19 economic recovery has rapidly lost steam in recent months.
Authorities unveiled measures to automobile sales last month. In June, they announced an extension of a purchase tax break on new energy vehicles (NEVs) until 2027.
