Not a single Tesla was sold in the country in April.

Following Hong Kong’s decision to reduce incentives for electric vehicles, sales of Tesla vehicles in the country plummeted. The local government slashed a tax break for electric vehicles on April 1, which resulted in no Model S or Model X deliveries during the whole month. Data from Hong Kong's Transportation Department also reveals only five privately owned electric vehicles were sold in May.

For a comparison, in March alone a total of 2,939 Tesla cars were registered, almost double the result of March 2016. During the first quarter of this year, new registrations were approximately 3,700.

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While this collapse might seem like an insignificant local phenomenon, it actually affects the global sales of the company. During Q1, Tesla registered record sales of more than 25,000 units globally, but in the next three months deliveries fell to just over 22,000 as a result of Hong Kong’s slump. Also, the collapse reveals once again how sensitive the automaker’s performance can be to government incentive programs. However, Tesla does not agree.

"Tesla welcomes government policies that support our mission and make it easier for more people to buy electric vehicles, however, our business does not rely on it," Tesla said in a statement quoted by Market Watch. "At the end of the day, when people love something, they buy it.”

Hong Kong’s government cited increased congestion of privately owned vehicles as a reason for the changed tax policy. The change that came into effect on April 1 sees incentives reduced only for the first 97,500 Hong Kong dollars (about $12,500) of a new EV’s price. Basically, the price effectively rose to approximately $130,000 from less than US$75,000 at the current exchange rates.

According to market specialists, Tesla’s Hong Kong problems could foreshadow new challenges for the brand in China.

"Hong Kong is the fashionable China," Dave Sullivan, an analyst for the consulting firm AutoPacific, commented. "It's not exactly painting a glowing picture for the future of Tesla in China."

Source: Market Watch

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