Tesla is becoming more reliant on sales to China

Tesla’s sales in China more than doubled last year, accounting for about a fifth of its total revenues, the electric-car maker said.

The Elon Musk-led company raked in nearly $6.7 billion in sales from China in 2020, or about 21 percent of the $31 billion it made worldwide, according to an annual report Tesla released Monday.

That marks a sharp increase from 2019, when China made up about $3 billion — or just 12 percent — of the automaker’s total revenues of $24 billion, the report shows.

The jump came as Tesla ramped up production at its “Gigafactory” in Shanghai, which opened in late 2019. The plant makes Model 3 sedans and Model Y SUVs that are sold locally in China and exported to Europe.

While the US remained Tesla’s largest market in 2020 with sales of more than $15 billion, China has played an increasingly important role in the company’s business as the world’s largest market for electric vehicles.

But Tesla also faces competition from local rivals such as Nio as well as increased scrutiny from regulators concerned about the safety of its vehicles.

Beijing’s State Administration for Market Regulation said Monday that it had met with Tesla’s Chinese affiliates and other government agencies to discuss a range of safety issues.

That came after Chinese officials recalled about 36,000 Model S and Model X vehicles over concerns about their touch-screen displays failing, according to CNBC. There were also reports in January that a Model 3 car had exploded in a parking garage in Shanghai.

“Tesla clearly needs to navigate any quality and regulatory issues in China over the coming months with a golden age of [electric vehicles] on the horizon,” Wedbush Securities analyst Daniel Ives said in a Tuesday research note, describing the recalls and quality concerns as “growing pains” for the company.

Tesla shares were down about 1.8 percent at $848.01 as of 11:34 a.m. Tuesday.