Tesla Among Biggest Losers as China’s Car Sales Fall on Covid Lockdowns

Among those hardest hit were

Tesla Inc.,

Volkswagen AG

and

Nissan Motor Co.

Last month, Tesla sold just 1,512 cars made at its Shanghai plant, down 94% from a year ago and far below the more than 65,000 it sold in March, according to data from the association.

The impact rippled globally too as Tesla’s exports from China, where the company makes the Model 3 and Model Y, fell to zero. The company exported about a third of the cars it made in Shanghai outside of China last year.

The electric-vehicle giant is struggling to get operations back into full swing despite reopening its Shanghai factory on April 19 after a 22-day suspension. Tesla made 10,757 cars at the plant in April, a fraction of normal output.

On Tuesday, it cut daily output again to fewer than 200 cars because supplies of some key components were suspended, according to people familiar with the matter. Tesla had been aiming to boost capacity to 2,600 cars a day, the pre-lockdown level, by mid-May as more workers are released from lockdowns, the people said.

Tesla didn’t respond to a request for comment. “I’ve had some conversations with the Chinese government in recent days, and it’s clear that the lockdowns are being lifted rapidly, so I would not expect this to be a significant issue in the coming weeks,” Tesla CEO Elon Musk said Tuesday at the Financial Times Future of the Car summit.

Toyota Motor Corp.

said Tuesday it will suspend production lines at eight plants across Japan from May 16 as a result of a parts shortage caused by the lockdown in Shanghai. The hiatus is scheduled to last six days and will reduce Toyota’s global production by 50,000 vehicles to 700,000 in May, the company said.

China’s auto sales, which began declining in March as Covid lockdowns spread, reflect broader problems in the country’s sputtering economy this year, with growth and exports slowing.

While car sales fell off a cliff at the start of the pandemic in early 2020, they bounced back quickly as China contained Covid outbreaks and its economy recovered. This time around, with the Omicron variant proving harder to suppress, analysts warn auto makers potentially face longer-lasting problems.

Cities including Shanghai and Changchun in the northeast, two auto manufacturing centers that produce more than one-fifth of the country’s auto output, have been restricting movement of people and goods for nearly two months. Although local authorities have allowed some companies in key industries such as automobiles and semiconductors to resume operations in closed-loop systems since late April, supply chains remain fragile.

Retail sales of two local joint ventures of Volkswagen slid 52% and 49% respectively, according to data from the association. Sales of

General Motors Co.

’s joint venture with state-owned SAIC Motor Corp. tumbled 57%.

Nissan said Monday its China sales in April fell 46% year over year, hit by lockdowns in key regions to contain the spread of Covid-19. Nissan attributed its drop in production and sales to semiconductor shortages, among other supply-chain and logistics disruptions caused by Covid lockdowns. The company’s parts export business was also affected, a company spokeswoman said.

Honda Motor Co.

said sales declined 36% due to the pandemic disruption and component shortages. Honda spokesman Zhu Linjie said the company’s joint-venture plants suspended manufacturing for about a week in April and despite resuming operations, the company is still facing a shortage of some automotive parts.

Supply and demand will continue to face severe challenges in May, including the disruptions by the Covid pandemic and Ukraine war, as well as a weakened economy and domestic consumption, Cui Dongshu, secretary-general of the association, said on Tuesday. He expected sales to continue to decline in May, though companies have progressively resumed operations.

“Companies in the sector are moving from ‘emergency response’ to more stabilized and resilient supply chain management,” Mr. Cui said.

Consumer confidence is also sagging, prompting more car dealers to offer steeper discounts. Some 43% of dealers surveyed by China Automobile Dealers Association expected consumer demand to continue to weaken in May, the group said last week.

One brighter spot in the April data was electric cars, with sales growing 78% in April to 282,000 vehicles from a year earlier, although that was the slowest growth rate since December 2020. The growth came as EV startups

NIO Inc.,

XPeng Inc.

and

Li Auto Inc.

saw production hammered.

The three companies said their delivery figures dropped by between 42% and 62% in April from a month earlier.

The outbreak incapacitated many of Li Auto’s suppliers located in Shanghai and nearby Kunshan, where 80% of them are based, according to the company.

“Some of them completely shut down production or delivery of their products, making it impossible for us to maintain production after exhausting our parts inventory,” Li Auto said in a statement earlier this month.

Ningde-based

Contemporary Amperex Technology Co.

, China’s top battery maker and a major supplier to Tesla, told shareholders on May 5 that their operations saw a “relatively small influence” as a result of Covid restrictions.

—Raffaele Huang contributed to this article.

Write to Selina Cheng at selina.cheng@wsj.com