Tesla is gearing up for another record-breaking quarter in China, with an anticipated sale of around 155,000 vehicles between April and June, marking a 13% surge from the first quarter. This bullish forecast, however, is shadowed by the growing challenge from domestic competitors such as BYD, as per analysts.
Despite the impressive sales projection, Tesla’s hold on China’s battery electric car market is predicted to contract to 13.7% from 16% in the first quarter, reports Reuters.
Meanwhile, local electric vehicle brands like BYD and Aion, a subsidiary of Guangzhou Automobile Group, are steadily expanding their market shares, according to Shi Ji, an analyst at China Merchants Bank International Securities.
Deutsche Bank’s prediction aligns closely, anticipating Tesla’s second-quarter sales in China to hit 153,000 units, contributing to a global total of 448,000 units.
“Tesla’s future growth depends on tapping into China’s smaller cities, but its direct sales model may not be the most cost-effective approach,” said Yale Zhang, managing director at Automotive Foresight, a Shanghai-based consultancy. “BYD has a significant edge in these markets with its widespread dealership network,” he added.
China, being Tesla’s second-largest market after North America, houses its largest manufacturing facility—Gigafactory Shanghai.
However, Tesla had to slash prices of its existing models earlier this year to stimulate sales and hold its own against competitors, including BYD, which sparked a price war resulting in discounts and launches of more affordable models.
While smaller electric vehicle makers such as Nio and Xpeng are grappling with dwindling sales in China, BYD has maintained its growth trajectory, particularly with cars priced under 300,000 yuan ($41,500).
Moreover, BYD is also closing the gap with Tesla in markets outside of China, outperforming Tesla in Singapore in the first five months and its Atto 3 outpacing Tesla’s Model 3 in Australia in May.
To counter this rising competition, Tesla is planning to roll out revamped versions of Model 3 and Model Y. It is also seeking approval from Chinese regulators for its advanced autonomous driving software to be accessible by drivers in China.
With Tesla’s Shanghai plant exceeding an annual production capacity of over 1 million units, the company is expanding its market reach in the region to include Thailand and Malaysia, offering China-made cars.
Official global sales numbers are expected to be announced over the weekend, with China-specific sales data available in the first week of July. Stay tuned, folks!
