Tesla stock was down 2% in the premarket session after Reuters reported that the company's vehicle sales in China for October tumbled an astonishing 70% from last month. According to the China Passenger Car Association, Tesla sold just 211 cars in the world's largest auto market in October.

The 70% drop in sales comes after the company admitted in October that tariffs were going to make for a "challenging competitive environment", adding the following:

Tesla continues to lack access to cash incentives available to locally produced electric vehicles in China that are typically around 15% of MSRP or more. Taking ocean transport costs and import tariffs into account, Tesla is now operating at a 55% to 60% cost disadvantage compared to the exact same car locally produced in China. This makes for a challenging competitive environment, given that China is by far the largest market for electric vehicles.

This news follows last week's report that Tesla was slashing prices on the Model S and Model X in the Asian country in order to try and offset the cost of tariffs for customers amid sliding demand. This purposefully under-the-radar announcement came on Thanksgiving day, and now sees Tesla bearing the brunt of costs associated with the ongoing trade war between China and the United States that it once said it would pass on to customers. We suggested that perhaps demand was not as robust as many thought in the country, as well. It looks as though these suspicions have been confirmed.

The price cuts came at a time when EV sales in China have been the silver lining of the entire auto industry, as we recently documented when discussing the shrinking global automobile market. EV sales were the sole sector of growth last month in China, increasing by 51% Y/Y. For the first 10 months of the year, sales were up 76% to 860,000 fueled by government subsidies and favorable policies, as well as still prevailing novelty. 

It's safe to say that Tesla may not have caught that country-wide tailwind.

It was also revealed on Sunday that the company was "bleeding money like crazy" and apparently just days away from dying in 2018. Elon Musk told Axios in an HBO interview that Tesla "faced a severe threat of death" during its Model 3 Production ramp earlier this year. 

"Tesla really faced a severe threat of death due to the Model 3 production ramp. Essentially, the company was bleeding money like crazy, and if we didn't solve these problems in a very short period of time, we would die. And it was extremely difficult to solve them."

The trade tensions between the U.S. and China don't look as if they're going away anytime soon, either.

Yesterday, President Trump made it clear that he was going to push forward with additional tariffs on China. Minutes after the market closed on Monday, the WSJ reported that with just four days to go before his summit with China’s President Xi, Donald Trump said he expects to move ahead with boosting tariff levels on $200 billion of Chinese goods to 25%, calling it “highly unlikely” that he would accept Beijing’s request to hold off on the increase.

This bad news for Tesla comes in the midst of a full scale slowdown in the Chinese car market. The outlook for automobiles in China doesn’t seem to be getting any better, according to a new Reuters profile that recently highlighted how the world's largest car market is still on pace to approach its first sales contraction in almost 30 years, according to industry data.

Now that we know that Tesla likely lowered prices (read: destroyed its margins) in response to anemic sales and not just as a favor to absorb tariff costs, which seemed like the ridiculous explanation the company wanted the public to believe, we can’t help but wonder if the company will find itself back in the precarious financial situation that Musk just described during Sunday’s Axios interview.

Channel NewsAsia said overnight that (surprise) "Tesla did not respond to repeated calls and written requests for comment on Tuesday."