Tesla deliveries from Shanghai factory jump, but BYD races ahead in China

Tesla deliveries from Shanghai factory jump, but BYD races ahead in China

HONG KONG—Tesla Inc.

TSLA 3.38%

had a big jump in deliveries from its Gigafactory in Shanghai in August after upgrading its assembly lines, but the American EV maker continues to lag behind Chinese rival BYD Company

1211 -3.05%

in the world’s largest automobile market.

Tesla China deliveries from the factory, which makes the Model Y and Model 3, totaled nearly 77,000 last month, nearly tripling from July and up 74% from a year earlier, according to data released Thursday by China Passenger Car Association. More than 42,000 of those deliveries were exports, the association said.

Tesla took about 12% of the wholesale Chinese new energy market in August, trailing BYD’s 16% share of pure electric vehicles. The US giant used to dominate China’s new-energy vehicle market but has lost ground to Shenzhen-based BYD, backed by Warren Buffett, which makes several popular battery-electric models and plug-in hybrids.

Despite huge production losses in April due to a prolonged Covid-19 lockdown in Shanghai, Tesla suspended its factory for several days again in July to upgrade assembly lines, seeking to ramp up production and make up for lost production. In July, Tesla said the factory could produce more than 750,000 cars a year after the upgrades.

The factory’s last delivery record was in June, when it sold about 79,000 vehicles manufactured there. The company averaged around 61,000 vehicles a month in the first quarter of the year before being hit by disruptions during China’s worst Covid outbreak in April.

Tesla recently reduced delivery lead times to a current maximum of 14 weeks for Chinese consumers, according to its Chinese website.

China’s passenger car market continued to grow with 1.87 million cars sold at retail in August, up 29% from a year earlier and up 3% from July.

Of all vehicles produced in China, more than 30% were electric or plug-in hybrid cars.

While overall sales and production levels have shown strong momentum in the market recovery, it is also unusual to see fewer cars produced in August than in July, said the association’s secretary general, Cui Dongshu.

Manufacturers typically produce more in August to increase demand in the fall. This year, some production capacity has been disrupted by Covid restrictions and regional heat waves.

BYD continued its recent rise in the market, breaking its own sales and production records last month and leaving other automakers in its rearview mirror.

The company sold nearly 83,000 pure electric cars as well as 92,000 plug-in hybrid vehicles in August, a total of 175,000 in sales, according to a document. Plug-in hybrids contain a small battery and a combustion engine and are considered new energy vehicles that would qualify for tax breaks and subsidies in most places.

Despite rapid growth in sales and revenue, BYD’s share price has dropped 18% since last Thursday, after stock filings revealed that its most famous sponsor – Mr. Buffett – since last year sold part of the stake in the Hong Kong-listed shares of the Shenzhen automaker, held by his investment firm Berkshire Hathaway Inc.

BYD also signed an agreement with Thai industrial real estate developer WHA Group to set up an electric vehicle factory in Rayong, on the east coast of Thailand. The new plant, which will add to BYD’s manufacturing base in China and its California bus plant, is expected to deliver 150,000 electric passenger vehicles in 2024, according to a statement from the WHA group.

Local Chinese brands saw 41% growth in August compared to last year, with 850,000 vehicles sold, while foreign joint ventures sold 770,000 cars, an increase of 18%.

Several foreign joint venture automakers, including those involving Volkswagen AG

and Toyota Motor Corp.

saw production halted by power outages in southwest China’s Sichuan province, caused by a long period of drought and heat wave not seen in six decades.

Toyota factory with FAW Group Co. in Sichuan province’s capital, Chengdu, suspended operations for a week last month. Still, including vehicles produced at the joint venture’s other plants, the joint venture still managed to sell 81,400 cars in August, up 7% from the previous month. The Chengdu factory kept assembly lines at reduced levels using an in-house electricity generator, a company spokesman said in late August.

The effects of the energy restrictions were limited and temporary, the association said last week. Auto assembly plants and component manufacturers were able to resume normal operation after the region saw rain and freezing temperatures.

As Chengdu came under Covid restrictions last Thursday, Toyota said it is operating at normal levels under government guidance, which requires some industries to continue operations by keeping workers living and working in a closed cycle.

China offers tax breaks as well as other incentives for new energy car buyers that were recently extended until the end of next year, designed to combat a sharp economic downturn that has dampened consumer demand.

write to Selina Cheng at selina.cheng@wsj.com

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