Tesla, the prominent U.S. automaker, delivered 72,115 electric vehicles (EVs) produced in China in October, marking a 2.6% decline compared to the previous month. The China Passenger Car Association (CPCA) shared this information, also noting a 0.6% increase in sales of China-made Model 3 and Model Y vehicles from the prior year.
Rising competition from Chinese rival
On the other hand, Chinese automaker BYD, known for its production of both EVs and hybrid models under the Dynasty and Ocean series, reported the delivery of 301,095 passenger vehicles in October. This signified a notable 5% rise from September and an impressive 38.4% increase when compared to the same month in the previous year.
Tesla’s focus on sales over earnings
Tesla, led by CEO Elon Musk, has been prioritizing sales efforts, especially in the competitive Chinese market. The company has faced increasing challenges from local rivals, prompting aggressive discounts to expand its market presence. However, these discounts have impacted the company’s profit margins while failing to significantly enhance its market share.
Market share in China’s EV segment
The latest data indicates that Tesla’s market share in China’s EV segment contracted to 9.89% in the third quarter, down from 12.98% in the second quarter and 9.93% during the same period in the previous year. This suggests a need for strategic adjustments to regain momentum in this vital market.
Production challenges and strategy in China
During the third quarter, Tesla fell short of expectations in terms of gross margin, profitability, and revenue. Planned factory upgrades for a revamped version of the Model 3 limited production, leading to fewer global deliveries in the same quarter. Notably, the updated and higher-priced Model 3 was launched in China in September, with deliveries officially commencing on October 26.
Chinese automakers thrive
In contrast, domestic automakers have made significant progress in China, the world’s largest auto market. Foreign brands like Mitsubishi Motors and Hyundai Motor have opted to reduce or wind down their operations. BYD, Tesla’s principal Chinese competitor, achieved a noteworthy 22.12% gross margin in the third quarter, solidifying its position as a market leader.
Aito’s success in the Chinese EV market
Furthermore, Huawei-backed EV brand Aito has garnered considerable attention with its revamped M7 model. Within the first 25 days following its mid-September release, the model received over 50,000 orders, underscoring the growing influence of domestic players in China’s dynamic EV market.
In summary, while Tesla faced a minor decline in China-made EV deliveries for October, competition from local rivals and a shift in focus towards sales efforts may influence the company’s strategy to regain momentum in the thriving Chinese EV market. Domestic automakers and emerging players are making their presence felt, reshaping the competitive landscape.