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China shipped 2.24 million cars in August, a record for a generally slow period.
There were a total of 716,000 electric vehicles and plug-in hybrids, up 35% from a year earlier.
The association said exports were the “main reason” for the strong sales.
Tesla (NASDAQ: TSLA) delivered almost 31% more Chinese-made cars in August than in July.
The automaker delivered 84,159 vehicles this month, including 64,694 cars sold in China and 19,465 units exported, according to data from the China Passenger Car Association.
TSLA has lowered prices for its Chinese vehicles as competition intensifies.
Rival BYD (OTCPK:BYDDF) reported a 57.5% year-over-year increase in passenger car deliveries for August.
On Thursday, Seeking Alpha analyst Sapphire Wealth Insights called Tesla overvalued.
“The shrinking margins of Tesla, Inc. (TSLA) are emphasizing its identity as an automaker, countering the claims of ardent supporters that it deserves a different valuation,” the analyst said. “Tesla is beginning to face the hurdles of traditional car companies, including supply chain disruptions, cyclical business patterns and increased competition.”
The EV manufacturer’s current share price is unsustainable. “Elon Musk’s unpredictable actions and statements, especially on social media, introduce an additional layer of risk. His disregard for shareholder concerns and potential political associations could affect the company’s success.”
Shares of TSLA are up 132% year to date.