HomeBusinessTesla's Chinese market share is shrinking, increasing global misery

Tesla’s Chinese market share is shrinking, increasing global misery

(Bloomberg) — While Tesla Inc. Struggling with a global slowdown in electric vehicle demand that has contributed to its biggest quarterly sales loss ever, Elon Musk’s automaker is also steadily losing ground in China – the world’s largest car market.

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Facing unprecedented local competition amid weakened consumer confidence in Asia’s largest economy, Tesla’s market share shrank from 10.5% in the first quarter of 2023 to about 6.7% for the quarter ended December, it showed from Bloomberg calculations based on data released by the country’s passenger car manufacturer. Association show.

While the PCA did not provide a monthly breakdown of local deliveries for March versus which EVs made at Tesla’s Shanghai factory are for export, the figures for the first two months of 2024 show that the market share of US automaker for the period was about 6.6% compared to 7.9% in the same period a year ago when Covid restrictions were just being lifted.

Tesla sales and production are consistently delayed in China, with the third month of each quarter being the strongest for local shipments.

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Tesla, which has long branded itself as an industry transformer with avant-garde products and advanced technologies, relies, at least in China, on two models: the Model 3 sedan and the Model Y SUV. Both were first revealed before 2020 and have seen only minor refreshes since then. Meanwhile, a slew of rivals, from BYD Co. to Nio Inc., Xpeng Inc., Li Auto Inc. and now smartphone maker Xiaomi Corp. new lineups unveiled packed with high-tech features.

BYD in particular has a wide range of models, from the Seagull hatchback, which has angular styling, a two-tone seagull wing-shaped dashboard and six airbags, which retails for less than $10,000, to the Yangwang U8 plug-in hybrid, a 1,200 horsepower luxury SUV that can float on water and make a 360-degree ‘refueling turn’ on the spot.

Read more: BYD sets up floating luxury SUV to win over European buyers

Price cuts used to be another sales booster for Tesla, one of the most successful practitioners of the direct sales mode, a strategy that allows the company to dictate the final price in accordance with production costs and market demand. However, Chinese automakers have proven determined to join the price war, which was kicked off by Tesla in January 2023 and repeated early this year. Many of them even deepened their price cuts earlier this week, a likely response to Tesla’s pre-announced price increase on Monday.

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As is the case in many places around the world, the growth of the Chinese EV market is slowing. The number of new energy vehicles is expected to increase by 25% to 11 million units this year, the PCA said. While still growing, that’s down from 36% in 2023 and 96% in 2022.

Tesla was forced to scale back production at its Shanghai factory, Bloomberg reported late last month. Tesla’s deliveries from its Shanghai factory, which makes electric cars for both China and exports to other parts of Asia and Europe, registered a decline in the first two months of 2024 from the same period a year ago, while total passenger car sales in China increased .

The PCA said on Tuesday that Tesla delivered an estimated 89,064 vehicles in China in March, down from 60,365 in February – the lowest since December 2022 – and largely in line with 88,869 in March 2023.

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Globally, Tesla said it delivered 386,810 vehicles in the first three months of the year, missing Bloomberg’s average estimate by the widest margin ever in data going back seven years.

“It’s been an epic disaster, not just in terms of the number of deliveries, but also in terms of the strategy,” Wedbush Securities Inc. analyst Dan Ives said in an interview with Bloomberg TV in Asia on Wednesday. “This is probably one of the most challenging periods for Musk and Tesla in the last four or five years.”

–With help from Linda Lew.

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