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Tesla Fights to Regain Ground in China Amid Slowing Sales

Tesla's struggles in China are compounded by increasing competition from local EV manufacturers and a global sales slump.

China News Service / Contributor / Getty Images

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Tesla has been facing a significant decline in sales in China, as the company grapples with intensifying local competition and weakened consumer sentiment. According to Bloomberg calculations, Tesla's market share in China has shrunk to 6.7% from 10.5% a year earlier.

Additionally, Tesla vehicles were reportedly barred from military and other government sites due to data collection concerns. However, the company has recently been cleared by the Chinese government over data security and privacy, which is expected to boost its sagging sales in the country.

Elon Musk, Tesla's CEO, visited China to seek approval for the introduction of the company's driver-assistance software and address the data security concerns. This move has resulted in a partnership with Baidu, a Chinese tech giant, to help Tesla overcome data security hurdles and gain a foothold in China's self-driving market.

Despite these positive developments, Tesla still faces challenges in China, as evidenced by its 98% drop in sales in April compared to the previous month. The ongoing COVID-19 lockdowns in the country have disrupted supply chains and negatively impacted consumer spending, adding further pressure on Tesla's sales performance.

Tesla, facing an intensifying price war and slowing sales in China, has taken several measures to regain ground in the world's largest EV market. The company has trimmed production at its Chinese plant, slashed prices for Shanghai-made vehicles, and entered into a partnership with Baidu to address data security concerns and boost its autonomous driving technology.