Apple, Tesla Earnings Reports Show An Increasing Reliance On China As A Market

Apple, Tesla Earnings Reports Show An Increasing Reliance On China As A Market

Apple Inc (AAPL) and Tesla Inc (TSLA) are both increasingly dependent on China for generating revenues, the latest respective company earnings indicate.

What Happened: In the quarter ended March 2021, the Tim Cook-led company saw revenues rise in China more than from all other territories with the exception of the rest of Asia Pacific.

Cook said he was “very pleased” with Apple’s performance in China during the earnings call.

“We set a March quarter revenue record and grew strong double-digits across each of the product categories.” The Apple CEO said that the company was “attracting some new customers in China, which is really important to us.”

A similar story is repeated across Tesla’s Q1 2021 numbers as well. Demand for Tesla’s vehicles — particularly the China-made Model Y — fueled the growth in revenue.

“We're making investments there [in China] ahead of the growth,” said Zachary Kirkhorn, Tesla’s Chief Financial Officer at the company’s earnings call.

“We’re trying to make sure that we are staying ahead of the volume so that we have the right sales capacity, store capacity there, local investments, and IT and others to manage the growth," Kirkhorn added.

Why It Matters: Apple’s Greater China sales amounted to $17.7 billion as per Q2 2021 numbers released Wednesday. In the same period last year, that figure was $9.4 billion. This represents an 88.3% growth.

China accounted for 19.8% of all sales in Q2 for Apple, while last year it accounted for 16.1% of all sales in the same period.

Tesla is even more reliant on revenues from China. Of the $10.4 billion total revenue for Q1 2021, $3 billion or 28.84% originated in China. Last year in the same period, $900 million out of a total $5.9 billion or 15.25% revenue had been sourced from China.

Comparatively, Tesla's derived $4.4 billion from the U.S. market in the period, which translates into 42.7% of total revenue. Last year in the same period it had raked in $2.8 billion from its home base or 47.45% of total revenue.

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