Tesla’s sales collapse in China .. Has it been eaten by the dragons?

Sales of Chinese-made cars by Tesla in China fell sharply last month after a series of negative advertisements resulted in the recall of nearly all cars sold by the company.

Tesla reported domestic shipments from China of just 8,621 units in July, a 69% drop from June, when the Tesla plant in Shanghai shipped 28,138 vehicles to the domestic market. However, exports increased from 5,017 to 24,347, with most of these vehicles heading to Europe. That means Tesla’s total shipments to China in July fell only 0.6% to 32,968.

After initially enjoying a huge Chinese reception as the only overseas automaker allowed to own its fully domestic operations, Tesla has suffered a series of setbacks this year. A protest by a disgruntled owner at the Shanghai Auto Show in April that went viral on social media was followed by a series of accidents and regulatory issues regarding safety and customer service.

Meanwhile, Tesla faces stiff competition from local electric car startups like Nio Inc, Xpeng Inc and Lee Auto, which just raised $ 1.5 billion on the Hong Kong Stock Exchange to help fund research and development and infrastructure expansion.

Li Auto delivered 8,589 cars in July, while Xpeng sold 8,040 cars last month, and New 7,931 delivered, marking the first month local startups recorded similar deliveries to the US giant.

Overall, sales of automobiles, sport utility vehicles and SUVs fell 6.4% in July from a year earlier to 1.52 million units, data from the China Automobile Association PCA. Sales of new energy vehicles, which include electric vehicles and plug-in hybrids, increased nearly 170% year-over-year to 222,000, thanks to strong performances from BYD, Tesla and SAIC Corp.