Tesla Inc ( TSLA ) shares are trading lower on Tuesday. The electric vehicle manufacturer reported steep sales declines in China that may be weighing on investor sentiment.

What To Know: Tesla moved just 26,006 vehicles in China last month — its weakest showing in three years, per data from the China Passenger Car Association via Reuters. That's a 35.8% drop from October 2024 and a sharp slide from September's 71,525 units, when deliveries kicked off for the Model Y L, a longer-wheelbase, six-seat version of the company's best-selling SUV built specifically for the Chinese market.

Tesla's share of China's electric vehicle market fell to just 3.2% in October, down from 8.7% in September — its lowest level in over three years. The company is facing growing competitive pressure in China, which was its second-largest market after the United States in the third-quarter.

Xiaomi is competing with Tesla with models like the SU7 sedan and YU7 sport utility vehicle. The company posted record monthly sales of 48,654 units. Meanwhile, overall car sales in China declined in October following weaker consumer sentiment due to cuts to government subsidies and tax incentives.

Tesla's soft performance in China also comes along poor sales last month in important European markets, such as Germany, Spain, the Netherlands and the Nordic region, pointing to continued challenges across the continent.

Ark Invest, run by Cathie Wood, sold 5,426 Tesla shares across ARK Innovation ETF and ARK Next Generation Internet ETF. With Tesla’s closing price at $445.23, the sale totaled approximately $2.4 million.

Recently, CEO Elon Musk highlighted the company’s move toward independence in semiconductor production, moving away from external suppliers like Taiwan Semiconductor Manufacturing Co ( TSM ) to improve Tesla’s AI capabilities.

TSLA Price Action: Tesla shares were down 1.91% at $435.33 at the time of publication on Tuesday, according to Benzinga Pro.

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