China's strict lockdown measures hit electric vehicle (EVs) production and sales last month for Tesla Inc (NASDAQ:TSLA) and local manufacturers such as NIO Inc (NYSE:NIO) as a new outbreak of Covid-19 hits the country, adding to supply chain and cost problems for the industry.
Total car sales plunged 11.7% to 2.23mln in March for what is the world's biggest car market vehicles, according to the China Association of Automobile Manufacturers.
This was the first decline in three months and came after an 18.7% surge in February.
Parts of Shanghai have been under complete lockdown since 28 March.
Covid cases in China over the past week were the highest since the peak of the first pandemic wave two years ago, with Shanghai now the epicentre of the worst outbreak.
This adds to a tough outlook for the EV industry, which is already dealing with high raw material prices and logistical challenges.
Tesla's Shanghai operations made fewer cars in March than in the traditionally slow month of February, reported Reuters, citing Cui Dongshu, secretary general of the China Passenger Car Association.
Despite delivering 16% more cars in March versus the previous month, Tesla's Shanghai factory produced only 154 more units in February, a shorter month during which workers usually take time off for Lunar New Year.
Tesla Shanghai produced 68,117 vehicles in January, and suspended production for two days in mid-March due to Covid controls. Shanghai's lockdown ensured work was halted again on March 28.
Nio, a Chinese EV maker, said its operations were disrupted by the recent epidemic outbreak, forcing the company to halt car production and delay deliveries, with suppliers in Shanghai and Jilin province offline.
In addition, Toyota Motor (NYSE:TM), Volkswagen Group (XETRA:VOW) and other global automakers have also been impacted by the latest outbreak in the world's second-largest economy.
However, China's three biggest EV carmakers posted bumper deliveries in March after slowing down a month earlier.
Xpeng Motors, based in Guangzhou, delivered 15,414 cars last month, an increase of 148% over the previous month.
Sales at Shanghai-based Nio increased 63% to 9,985 vehicles, while Beijing-based Li Auto delivered 11,034 vehicles, an increase of 31%.
However, as automakers work to overcome supply chain issues to maintain production, they have warned that sales will be impacted in the second quarter.