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Tesla shares drop on report of steep May sales decline in China

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TSLAA Model Y vehicle displayed at a Tesla flagship store on Jan. 4, 2021 in Shanghai, China.Gao Yuwen | Visual China Group | Getty Images

Tesla shares dropped more than 5% Thursday after a report said the company’s vehicle orders in China steeply declined last month.

The Information, citing a single source familiar with the data, wrote that Tesla’s “monthly net orders in China dropped to about 9,800 in May from more than 18,000 in April.” CNBC has not corroborated that report.

Tesla’s Shanghai factory is supposed to have the capacity to make around 500,000 electric cars a year for deliveries in China and exports to other parts of Asia and Europe.

Elon Musk’s electric vehicle company has been grappling with recalls and safety investigations in China. It is also dealing with a public relations backlash there following some high-profile vehicle crashes, price changes and quality complaints from Chinese customers.

JL Warren Capital CEO Junheng Li said in an e-mail to CNBC that even though Tesla hasn’t spoken about potential impacts of its PR crisis in China, she expects they will be material.

“We see a definitive material impact on Tesla branding, orders and deliveries for future months, although it’s hard to quantify exactly