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Tesla and NIO sales suffer in China as bumpy economic conditions continue

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It’s no secret that the tensions between the US and China are high, but now it appears to be affecting the rapidly-growing country’s EV market. Don’t get me wrong, China’s EV sales still put the US to shame, more than 45,197 all-electric vehicles in sold April alone. But the more notable portion of that news? Pure EV sales fell 4% compared to the stellar 2018 sales (I’m excluding plug-in hybrids on purpose).

There are a couple of reasons for the speed bump in EV sales growth. First, are the massive changes happening to Chinese NEV (new energy vehicles, which includes plug-in hybrids) subsidies. Second, as mentioned above, the macroeconomic effects from US-Chinese relations. The system for Chinese NEV subsidies is incredibly complex, and I’m not going to pretend to know all the system’s ins and outs. But it’s worth pointing out a few differences from more traditional tax rebates or credits. Tesla doesn’t currently earn any subsidies from their sales in China, their future Chinese-built Model 3s would be eligible for subsidies.*

One of the major differences between the US’ federal tax rebate system and Chinese subsidies lies with the redemption process, or lack thereof. Rather than putting the responsibility on consumers, the Chinese government requires all manufacturers to factor in subsidies into sales prices, then request payment from the government. This process is incredibly beneficial to consumers, allowing them to realize the price reduction immediately, but causes many automotive companies troubles. The subsidy request process in China can take up to a year for automakers to be reimbursed, straining their balance sheets and hurting their cash flow.

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This subsidy request process doesn’t cause a huge threat to large established companies, who have strong cash flows from their ICE sales (see, BYD). But for small companies like Tesla and NIO, these sort of subsidy structures can put them at a disadvantage compared to their peers. In fact, NIO’s VP of Quality, Feng Shen, recently told me that he believed that the reduction of subsidies will help NIO in the long term. Tesla’s Musk has echoed this premise with US subsidies (ZEV credits and consumer tax credits)— allowing all companies to compete on a more equal playing field.

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While Shen might be right, NIO and Tesla’s sales appear to be taking a hit in part to subsidy reductions. NIO reported only 1,124 sales of the ES8 in April, with a total of 5,113 in the first four months of 2019. However, NIO stated that the ES8 has outsold the Tesla Model X 2:1 in the same four months, indicating ~2,500 sales (foreign-built vehicles aren’t required to report sales figures). While Tesla doesn’t report regional sales figures, NIO’s statements about the ES8’s lead over the Model X hints at the increasing competition in China’s premium all-electric SUV segment. 

It’s nearly impossible to tell if macroeconomic conditions or subsidies are playing a bigger role here, but I’d say its safe to assume its a mix of the two are hurting NIO’s sales (Tesla’s US-built vehicles aren’t eligible for subsidies). I wouldn’t say this slump in EV sales is an indicator of long-term demand in the world’s largest automotive market, but both Tesla and NIO have placed large bets on huge demand. Tesla’s Shanghai Gigafactory is well under construction and the company is expecting huge demand for their lower-cost Model 3, which is priced at RMB 328,000 (~$47,400).

But for NIO, the company is feeling the pressure. Unlike Tesla, China is the company’s sole market and they are burning cash quickly ($390M in Q1). To cut their cash burn NIO has been remarkably reactive, cutting costs by an impressive (obviously not to some) 25% in Q1 and focusing on launching their second (lower-cost) vehicle, the ES6. The company isn’t ready to revise its 2019 guidance (35-40K vehicles) yet, but is cautiously watching the Chinese market.

With the world’s largest auto market hitting a speed bump, the entire industry is on pins and needles, watching and waiting for a recovery. When do you think the Chinese EV market will bounce back? Do you think Tesla and NIO are over-investing in China?

*Update: An earlier version of this article indicated that Tesla’s vehicles were eligible for China’s NEV subsidies. Only NEVs built in China are eligible for these subsidies and Tesla may benefit from them in the future with their Chinese-built Model 3. 

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Christian Prenzler is currently the VP of Business Development at Teslarati, leading strategic partnerships, content development, email newsletters, and subscription programs. Additionally, Christian thoroughly enjoys investigating pivotal moments in the emerging mobility sector and sharing these stories with Teslarati's readers. He has been closely following and writing on Tesla and disruptive technology for over seven years. You can contact Christian here: christian@teslarati.com

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Elon Musk

Elon Musk drops a surprise update on Boring Company’s next big dig

Musk says Boring Company could shrink the Austin to San Antonio drive to just minutes.

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Elon Musk says The Boring Company is working on what he called “a simple, precursor Hyperloop” tunnel connecting Austin and San Antonio, targeting speeds above 200 mph and cutting a drive that can take up to two and a half hours down to a consistent under 30 minutes. Musk posted the idea on X Sunday, in a reply to a repost of an AI generated video imagining a science fiction future with human colonies on other worlds, which he shared with the line “This is the future we shall bring into being.”


The Boring Company’s own account picked up the idea in the same thread, adding a detail about how the trip would actually work: “Because Loop/Hyperloop is express (i.e. no intermediate stops), one could travel from an Austin parking lot to a favorite San Antonio restaurant in about 30 minutes. As long as they both have Loop stations.” That framing ties the proposed intercity link to the same station model the company already runs in Las Vegas, where riders enter the tunnel network through small, garage style stops rather than one central terminal.

This is not the company’s first run at the Austin to San Antonio corridor. Boring Company floated tunnels between the two cities as far back as 2021, and later competed for a separate San Antonio Loop project tied to the airport before that specific bid stalled. Pitches for tunnels in Chicago, Los Angeles, and a New York to Washington corridor have followed a similar pattern of big announcement without a shovel in the ground.

What is different this time is the balance sheet, especially since The Boring Company closed a 3 billion dollar funding round led by investors in the United Arab Emirates earlier this month at a valuation near 23 billion dollars, giving the tunneling company more capital to chase speculative projects than it had during its earlier Texas pitches. The company is also mid-build on two other intercity systems it has actually broken ground on, inc;luding a Nashville tunnel linking downtown to the airport, where a second boring machine finished commissioning in June, and its Las Vegas network, where the station count keeps climbing on paper faster than tunnels get dug.

That gap between announcement and execution is the reason to treat Sunday’s post as an opening bid rather than a project. A tunnel spanning roughly 80 miles between two metro areas, running at speeds Boring Company has not demonstrated over any real distance, would dwarf anything the company has built. For now, the Austin to San Antonio Hyperloop exists as a caption under an AI generated space video.

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Tesla eyes supply partners for Optimus mass production

Tesla certified three Chinese suppliers for Optimus mass production, signaling its robot timeline is accelerating.

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Concept rendering of Tesla Optimus in mass production

Tesla’s robotics team traveled to Ningbo, in China’s Zhejiang province, on September 16 and spent the following day auditing component suppliers for Optimus, according to a Bloomberg report cited by RobotAIGeek. The visit moved three manufacturers from provisional status to certified mass production partners: Tuopu Group, which handles actuators and chassis components, Ningbo Joyson Electronic, a sensor supplier, and Zhejiang Sanhua Intelligent Controls, which builds thermal management systems. All three already supply parts to Tesla’s electric vehicles, and the audit reportedly came with fresh orders that supply chain reports put at an initial batch of roughly 5,000 units.

Tuopu, Joyson, and Sanhua built their manufacturing base serving the automotive industry, where tolerances and volume requirements are already close to what a mass produced humanoid robot demands. Sanhua in particular has history here. Teslarati reported last October that the company had received a roughly $685 million order for linear actuators tied to Optimus, a volume industry watchers estimated could cover around 180,000 robots once production ramped.

Supply chain reports tied to this week’s audit put Tesla’s near term production goal at about 1,000 Optimus units a week by late September, rising to 2,000 to 2,500 units a week by the end of the year. That pace would put real weight behind the timeline Tesla has been building toward since May, when it wound down Model S and Model X production at Fremont to convert that floor space into a dedicated Optimus line targeting one million units annually. JPMorgan analysts who toured the factory in August confirmed the conversion took roughly four months, a pace Musk has called unprecedented for a facility that size.

New drone video shows Tesla’s Optimus Factory reaching a turning point

Fremont is only the first phase. A second, larger Optimus plant is rising at Gigafactory Texas, where drone footage shared by Joe Tegtmeyer last week showed the structural steel nearing completion on the north end of the building. Tesla has said that facility is meant to eventually support production of up to 10 million units a year, though volume output there is not expected before 2027.

Commercial sales of Optimus are still targeted for the second half of 2027, but production is expected to start well before then. JPMorgan analyst Rajat Gupta has said Tesla’s “Optimus Academy” program, which uses early units to collect real world training data inside Tesla’s own facilities, is expected to be running later this year. Bloomberg Intelligence analyst Ian Ma described the Ningbo audits as “a positive commercialization signal for China’s humanoid supply chain,” noting that sentiment could improve further if the visit leads to confirmed supplier nominations and larger orders. The Solactive China Humanoid Robotics Index rose about 1.4% on the news, though it remains down roughly 30% for the year.

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Elon Musk’s next Uranium in Uranus merch is Boring Company’s weirdest tease yet

Elon Musk teased a glowing new Boring Company merch idea, complete with a Geiger counter.

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Concept rendering of Boring Company Uranium in Uranus merch tease via Grok
Concept rendering of Boring Company Uranium in Uranus merch tease via Grok

Elon Musk teased the next piece of Boring Company merchandise on X Saturday, and it is exactly as unserious as fans of the company’s product history have come to expect. “The next @boringcompany merch will put Uranium in Uranus,” Musk wrote in a thread posted early Saturday morning. He followed up by explaining that the item would glow in the dark, “because otherwise how could you find it,” and that a Geiger counter would be sold separately as “an optional strap-on.”

Musk closed the thread with a line that doubles as a mission statement for the tunneling company’s merchandise arm: “It’s not easy coming up with something that is both outrageously unsellable and yet extremely popular.”

The Boring Company has built a small but consistent side business out of novelty items that start as jokes and end up selling out. The company’s Not-a-Flamethrower raised roughly $10 million in a few days back in 2018, moving all 20,000 units it produced. Its Burnt Hair perfume, priced around $100 a bottle, sold out fast enough that scalpers were flipping units on eBay for ten times the retail price. Boring Bricks, made from tunneling spoil, followed the same playbook of teasing a product on X months before it became real.

Musk has not said what the actual item will be, only that it involves uranium and glows in the dark. Given the pattern, that vagueness is probably intentional. Past merch announcements have started as one-line jokes and taken weeks or months to turn into an actual product listing on the company’s site, and there is no guarantee this one follows through at all.

The timing lines up with a period of real momentum for the Boring Company outside of the joke merchandise. The company said last week it plans to double the number of operational stations on its Vegas Loop by the end of the year, a target tied to a hiring push for drivers and operations managers. Prufrock-5, one of the company’s tunnel boring machines, also just wrapped a test tunnel in Bastrop, Texas, and is expected to relaunch on its next assignment in November.

Whether the uranium joke turns into an actual product remains to be seen. Musk’s post did not include a price, a shipping date, or even a name for the item, which has historically meant a Boring Company website page goes up quietly, password protected, sometime before an announcement.

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