Tesla sales took a hit in Hong Kong after the tax break on electric vehicles was taken back on April 1. The Wall Street Journal, sighting official data from Hong Kong’s Transportation Department, stated that no new Model S sedans or Model X sport utility vehicles were registered in the Chinese territory in April. In May, only five privately-owned electric vehicles were registered.
Tesla sales not dependent on tax break?
According to The Wall Street Journal, increases in sales were registered just before the changes in the rule on April 1. In March, a total of 2,939 Tesla vehicles were registered, and approximately 3,700 were recorded for the first quarter of 2017.
A Tesla spokesperson told Business Insider that the company supports government policies that make it simpler for people to buy electric vehicles. The person also claimed that the company is not dependent on tax breaks to progress.
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“In China, for example, we’ve tripled our revenue from 2015 to 2016 despite a massive tariff and no incentives. At the end of the day, when people love something, they buy it,” the spokesperson said.
The Tesla spokesperson stated that Hong Kong is one of the company’s most important markets. Further, the executive said that it was expected that sales of electric vehicles would take a hit after the tax break was withdrawn, which increased the cost of the car by almost 100%. “The large number who bought just prior to the change being implemented” why demand took a hit.
After the tax breaks were withdrawn, the cost of a basic Tesla Model S in Hong Kong has risen to about $130,000 from less than $75 million with the tax incentive. With the U.S. firm looking to set up a manufacturing plant in Shanghai, the territory’s future course of action will be interesting to watch.
Global sales down in Q2
The sales hit is not confined to the boundaries of Hong Kong alone, as a similar downturn was seen in global sales too. During the first quarter, the EV maker shipped a total of 25,000 vehicles, its best quarterly number ever, which fueled the company’s stock price to push its market capitalization past that of Ford and temporarily, General Motors. However, in the second quarter, global sales came down to 22,000 units.
When announcing the numbers last week, the Palo Alto-based company stated that the delay in production of 100 kilowatt-hour battery packs caused sales to dampen. However, investors went into cautious mode, expecting there could be production issues with the Model 3, Tesla’s first mass-market car.
Goldman Sachs lowered its target price on Tesla from $190 to $180, citing flat sales of the Model S and the cloud over the Model 3 launch target. The news that the Model S failed to get the Top Safety Pick award from the Insurance Institute for Highway Safety also pushed the shares down last week.
On Friday, Tesla shares closed up 1.42% at $313.22. Last week, the stock was down more than 18%, while year to date, the stock is up almost 47%.