Tesla pushes back against report of 70 percent sales drop in China

The new Tesla factory outside of Shanghai can't open soon enough. Despite a voracious appetite for the American electric sedan, Tesla sales in China reportedly dropped by 70 percent in October compared to the same period in 2017, according to the China Passenger Car Association, with the automaker allegedly selling just 211 cars in the country last month. The main culprit appeared to be a 40 percent tariff imposed in July by China on U.S. vehicles, part of an ongoing trade skirmish with the U.S. that has also seen the price of steel rise significantly for U.S. automakers.

Tesla has now pushed back against that report, according to Reuters, following a drop in stock price in response to the initial report of a drop in sales.

"This is wildly inaccurate. While we do not disclose regional or monthly sales numbers, these figures are off by a significant margin," a Tesla spokesperson told Reuters.

Still, the automaker has suffered setbacks when it comes to sales in China this year, and has lowered the price of its vehicles by 12 to 26 percent to counteract the effect of the tariffs amid the first real sales slump in auto sales in the country in 30 years.

"We are absorbing a significant part of the tariff to help make our cars more affordable for customers in China," Tesla said in a statement earlier this year, announcing the price cuts in China.

Earlier this summer the electric automaker secured a deal with authorities in Shanghai for a plant near the city that would double Tesla's vehicle production. The automaker plans for the plant to reach a production capacity of 500,000 unit three years after the plant opens, which is still at least a couple of years away. That production capacity, in effect, is at least five years away in a best-case scenario.

Industry watchers noted that despite ambitions for the Chinese market, Tesla is still not in a favorable financial position at the moment to build and tool-up the plant itself. Tesla is expected to rely on significant help from the Shanghai government to create the plant, but it will still need fresh capital to make the factory happen. In fact, the automaker is expected to need fresh cash very soon, within months, despite recording a rare profitable third quarter this year.

Still, with the Shanghai factory being at least two years away from churning out cars, Tesla's short-term prospects in China do not look particularly encouraging at the moment

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