But with the Shanghai lockdown in its fourth week and similar measures imposed in dozens of smaller cities, the world’s largest boom market for electric cars has collapsed. Other companies, from luxury goods manufacturers to fast food restaurants, have also offered a first reading of the lost sales and shaky confidence of recent weeks, even as Beijing implements measures to help COVID-hit industries and boost demand. Joey Wat, CEO of Yum China, which owns KFC and Taco Bell, said in a letter to investors that April sales had been “significantly affected” by COVID controls. In response, the company simplified its menu, improved staff and promoted bulk orders for excluded communities, he said. The pressing question now is: how and when will Chinese consumers start buying everything again – from Teslas to tacos? In China’s once-hot electric vehicle market, the recent turmoil is a shining example of one or two economic shocks, first in supply and then in demand, from Beijing’s tough implementation of COVID controls to the world’s second-largest economy. Before Shanghai closed in early April to contain the COVID-19 outbreak, electric vehicle sales were booming. Tesla sales in China rose 56 percent in the first quarter, while sales of electric vehicles from China’s biggest competitor, BYD, had increased fivefold. Then came the lockdowns. Shanghai showrooms, shops and malls were closed and its 25 million inhabitants could not shop online for much more than food and daily necessities due to bottlenecks in tradition. Nomura analysts estimated in mid-April that 45 cities in China, which accounted for 40 percent of gross domestic product (GDP), were under full or partial lockdown, with the economy facing an increasing risk of recession. Lockdowns in Shanghai and other Chinese cities hurt China’s economy [File: Alex Plavevski/EPE-EFE] The China Passenger Car Association estimated that retail passenger car deliveries to China were 39% lower in the first three weeks of April than a year earlier. COVID controls were reduced on shipments, car dealers avoided launching new models and sales fell in China’s richest markets, Shanghai and Guangdong, the union said. A representative of a premium German car brand in Jiangsu Province, which borders Shanghai, told Reuters that sales fell by a third to a half in April, citing lockdowns and barriers to trucking that made delivery difficult. . He was even more concerned about the impact on consumer power, he said, refusing to give his name as he was not allowed to speak to the media. “It could be worse than the first wave of COVID in 2020, when the economic recovery was fast and strong. “Today there is more uncertainty in the economy and the stock and real estate markets are not doing well,” he said. “A lot will depend on how quickly these restrictions can be lifted, but the coming weeks can be difficult,” Helen de Tissot, chief financial officer of French spirits company Pernod Ricard, told Reuters on Thursday. Kering, which owns luxury brands including Gucci and Saint Laurent, said a “significant chunk” of its stores had closed in April. “It’s very difficult to predict what will happen after the lockdown,” said Jean-Marc Duplaix, Kering’s chief financial officer. Apple also warned of its latest results on demand affecting COVID in China.
Stimulate demand
City officials from Beijing to Shenzhen are trying to boost demand by offering multimillion-dollar shopping vouchers to encourage residents to spend. On Friday, Guangdong, a power plant with more economics than South Korea, unveiled its own incentives to try to restart sales of EV and plug-in hybrids. These include grants of up to 8,000 yuan ($ 1,200) for a selected range of what China classifies as “new energy vehicles”, including Volkswagen and BYD. Tesla, the second best-selling EV in China, was excluded from the subsidy program. The American car industry did not respond to a request for comment. Chongqing, another automotive hub, said in March it would offer cash of up to 2,000 yuan ($ 300) to buyers exchanging old cars for new models and another $ 3 million for other measures to boost sales. While noting such measures, Credit Suisse analysts still say they believe COVID control measures have put consumption online both offline and offline. “We see that the consumer sector is in great danger if the prolonged pandemic and further tightening continue throughout China,” they said in a research note on April 19.
