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Tesla Shares Slip Lower After NIO Earnings, China Sales Forecast

Potentially softer electric vehicle sales in China, as well as intensifying competition in Europe, have Tesla shares on the back foot Tuesday amid a month-long slump for the clean-energy carmaker.

Tesla (TSLA)  shares edged lower Tuesday after its smaller China-based rival, NIO  (NIO) , cautioned that electric car sales in the world's biggest market would slow over the first three months of the year.

NIO said it expects to deliver between 20,000 and 25,000 cars over the current quarter, down from the 42% growth rate it recorded over the final half of last year. The forecast followed a wider-than-expected fourth quarter loss of $230 million for the Shanghai-based carmaker, and bodes poorly for the near-term prospects of Tesla, which is increasingly reliant on China sales to boost its top and bottom lines.

Tesla sold 15,484 of its China-made cars in January, the China Passenger Car Association (CPCA) said last month, down from 23,804 in December. Tesla's China sales were around a fifth of its overall total in 2020 - when it delivered a record 499,550 vehicles -- up from just 12% in 2019.

Tesla shares were marked 1.2% lower in early trading Tuesday to change hands at $710.00 each, a move that would still leave the stock with a 58% gain over the past six months.

NIO's U.S.-listed shares, meanwhile, slumped 7.75% to $45.95 each. 

Tesla's domestic prospects, however, appear slightly more robust, thanks in part to the electric vehicle investment push from the new administration of President Joe Biden. 

Biden has promised to build 550,000 electric vehicle charging stations while creating some 1 million new jobs through investment in clean energy research.

Investors will be looking for indications that data from Tesla's self-driving system will increase safety and accelerate the roll-out of FSD vehicles in the coming years, while seeking insight on costs linked to its battery cell production. 

In Europe, however, competition is intensify with Volvo -- which Hangzhou-based Zhejiang Geely Holding Groupis -- announcing Tuesday its aim of offering an all-electric vehicle fleet by 2030, matching similar targets recently-unveiled by Ford Motor Co.  (F)  and Volkswagen AG.