Elon Musk is no longer the world’s richest person—and China is to blame. Tesla shares dropped 7.2% in Monday trading, following weak February sales in China, one of the U.S. EV maker’s most important markets. Shares then dropped an additional 2.4% in extended trading.
Tesla sold 60,365 China-made vehicles in February, according to data released by the China Passenger Car Association on Monday. That’s down 19% from the same period a year earlier, and the lowest level of deliveries for Tesla since December 2022.
The U.S. carmaker delivered a record number of vehicles in the final quarter of last year, yet still lost its title as the top EV maker by sales to China’s BYD.
China’s EV market is slowing down after months of rapid growth, hitting China’s other EV manufacturers. BYD, which recently overtook Tesla as the world’s largest seller of battery electric vehicles, sold 112,311 new energy vehicles (a term that includes both battery EVs and plug-in hybrids) in February, down by over 37% from the same month a year earlier.
Overall, the CPCA estimated that sales of new energy vehicles totaled 450,000 units in February, a 9% year-on-year drop. The association suggested that the Lunar New Year holiday, which fell on a February this year, may have depressed car-buying.
Yet Tesla is also facing steep competition in the Chinese market from its local rivals, like BYD, which boasts Warren Buffett’s Berkshire Hathaway as a backer, or Chinese EV startup Li Auto. China’s EV market is in the throes of a fierce price war that’s putting pressure on margins and pushing companies to make more affordable models. The CPCA suggested that price cuts may be pushing consumers to adopt a wait-and-see attitude in the hope of further discounts.
Musk promised in January that Tesla could release a $25,000 entry-level model as early as 2025. Its entry-level Model 3 costs about $34,000 in China.
Tesla has rolled out its own incentives to boost sales in China. Last week, the EV maker said customers who bought Tesla’s existing inventory of Model 3 sedans or Model Y sports utility vehicles by the end of March could get an insurance subsidy of as much as 8,000 yuan ($1,111).
Tesla’s weak China sales hit Musk personally. The plunge in Tesla shares was enough to knock Musk off his perch as the world’s richest person for the first time in almost nine months. Bloomberg now estimates the Tesla CEO has a net worth of $197.7 billion, compared to Amazon founder Jeff Bezos’s fortune of $200.3 billion.