Tesla Helpless Against Low-Price Offensive... "China Market Share Drops from 10.5% to 6%"

US electric vehicle company Tesla is rapidly losing its foothold in China, the world's largest automobile market, according to an analysis. It is pointed out that Tesla was helpless against the low-price offensive from local companies.

[Image source=Yonhap News]

On the 3rd (local time), Bloomberg News cited statistics from the China Passenger Car Association (CPCA) and reported that Tesla's market share in China shrank from 10.5% in the first quarter of last year to 6.7% in the fourth quarter. By February this year, the market share further slightly dropped to 6.6%.

Bloomberg analyzed that Tesla's market position has diminished as local companies launched new electric vehicle lineups equipped with advanced technology. BYD, Li Xiang (Li Auto), Xiaopeng (Xpeng), and recently entered Xiaomi are representative examples. In contrast, Tesla has been relying on the Model 3 sedan and Model Y sport utility vehicle (SUV) in China for several years.

Chinese companies are expanding their market dominance through low-price offensives. In particular, BYD sells various models such as hatchback styles, luxury SUVs, and hybrids at prices below $10,000 (approximately 13.5 million KRW). Tesla responded to intensified competition in the Chinese market last year by lowering prices but recently announced a policy to raise prices again after profitability declined.

Tesla also posted sluggish results, reflecting difficulties in the Chinese market. Tesla announced on the 2nd that its global deliveries in the first quarter were 386,810 units, down 8.5% compared to the same period last year. This was significantly below the FactSet estimate of 457,000 units, causing the stock price to plunge about 5%.

Dan Ives, an analyst at Wedbush Securities, said in an interview with Bloomberg TV on the same day, "(Tesla's) delivery numbers and strategy were a huge disaster," adding, "It seems that Elon Musk and Tesla are facing their toughest time in about 4 to 5 years."