Tesla’s waning Chinese market share compounds global woes

April 3

THE GLOBAL SLOWDOWN in electric vehicle demand that contributed to Tesla Inc’s biggest-ever quarterly sales miss is hurting Elon Musk’s standing in China, the world’s biggest automotive market. 

Confronted with unprecedented local competition and weakened consumer sentiment in Asia’ slargest economy, Tesla’s market share shrank to around 6.7% for the quarter ended in December, from 10.5% in the first quarter of last year, according to Bloomberg calculations based on China’s Passenger Car Association data. While the PCA has yet to provide a breakdown of how many vehicles leaving Tesla’s Shanghai factory were shipped locally in March, figures for the first two months of the year show the carmaker’s share slipped to around 6.6% from 7.9% during the same period a year ago, when Covid restrictions were just lifted. 

The US firm’s sales and production are consistently backloaded in China, with the third month of each quarter being the strongest for local shipments. Tesla shares fell as much as 1.2% before the start of regular trading Wednesday after falling 4.9% on Tuesday, their biggest drop in a month.

While Tesla has long prided itself as a disruptor with cutting-edge technology, it’s having a hard time competing with just two vehicles in China: the Model 3 sedan and Model Y sport utility vehicle. The company first unveiled both models before 2020 and has made relatively minor updates since their introductions. By contrast, a slew of rivals from carmakers BYD, Nio, Xpeng and Li Auto, to smartphone giants Huawei and Xiaomi offer newer or more extensive lineups of vehicles packed with tech features. 

BYD, in particular, offers wide spectrum of vehicles. Its Seagull hatchback has a 10-inch rotating touchscreen and retails for under $10,000. On the high end, its Yang Wang U8 plug-in hybrid SUV boasts 1,200horse power; ,can float on water and makesa 360-degree “tank turn ”on the spot. 

Discounting used to be a deliveries booster for Tesla, which has been one of the most successful practitioners of the direct-sales model. But China’s automakers have proven determined to join the price war Tesla kicked off in late 2022 and continued early this year. Many domestic manufacturers marked down models further early this week, seizing on Tesla’s pre-announced price hike that took effect Monday.