Just as Tesla reclaims $1 trillion market cap, worrying data out of China has investors asking questions

• Tesla's sales in China tumbled to just 3,070 vehicles last week, the worst performance since the start of Q2, driven by low volumes of the new Model Y. Despite the volatility in such high-frequency data, the market is crucial for Tesla. The brand can sell more cars in seven days there than in major European countries over the course of several months.

The gulf between Tesla’s $1 trillion market value and its underlying fundamentals like sales and earnings continued to widen after weekly data from China revealed a worrying trend.

On Tuesday, insurance data indicated Tesla’s EV sales dropped to just 3,070 vehicles during the week to May 11, a sequential plunge of 58%, and 69% below the comparable period last year. 

Unfortunately for Tesla, sales of its lower volume Model 3 sedan were broadly stable. The declines came entirely from the new Model Y, responsible for two-thirds of all Teslas delivered worldwide. Only 1,270 vehicles were sold, its lowest weekly tally since going on sale in late February.

Tesla investors scrutinize this high-frequency data since China is Tesla’s single biggest market, eclipsing even the United States. In fact it’s so large, more cars can be sold there over seven days than in a major European country like Germany over the course of several months. 

In China, 3.1k Tesla insurance registrations were reported for the week of May 5 to 11.