Chinese Demand For Tesla Slows As Coronavirus Spreads Fear, But The Biggest Killer Will Be Trade Wars
As the Coronavirus spreads to all parts of the world, the epi-center of the global pandemic is experiencing falling consumer demand in all retail sectors. Tesla is one of many examples where the automotive retail trade has been hit hard. New car registrations for Tesla during January 2020, were down 46 percent compared to the previous month, December 2019. In figurative terms that equates to 3,563 new orders compared to 6,643 new orders in December 2019. The finger pointing for the drop in demand is being blamed squarely on the Coronavirus. Chinese consumers are reportedly staying away from retail outlets until the highly infectious virus ceeds it’s grip on public health.
Tesla’s experience will be shared by many in the atomotive manufacturing industry. But the Coronavirus is one of many contributory factors in a complex consumer market. New car sales in China have been on the decline for the past three consective months. The main driver for this decline in consumer spending is to due an economic slowdown. As it always is. However this slown down in Chinese consumer spending could have been avoided.
Trade tensions between America and China has caused the slowdown. The U.S. Prsident, Donald Trump, has imposed hundreds of billions worth of trade tarrifs on China, China has hit back like wise. Trump is attemping to force China into a corner by demanding lower tarrifs and better access for U.S. goods services. China has had no choice but to impose tarrifs on American goods and services.
The irony is that America holds a $1.1 trillion USD debt to China. This perfiect storm of trade tensions has squeezed Chinese consumer spending. The double irony with Trumps trade war grand standing is that American goods are being hit hardest. New cars sales in China are continuning to plunge, February 2020 will will see an 83 percent fall across the industry.
Tesla set up its first production plant outside the U.S. in a bid to side-step tarrifs and sell direct to the Chinese consumer. This time last year Tesla sold 853 units in January. However battery powered cars in general are trending towards an overall decline as demand has waned 54 percent in January.