As weird as it seems, Tesla (TSLA) is still a small startup compared to its more established rivals.
Yes, CEO Elon Musk is the world’s richest man, and Tesla is one of the most high-profile and highly valued car brands, but Tesla doesn’t sell nearly as many vehicles as its counterparts.
Ford had a rough first quarter, with revenue declining 5% to $40.7 billion. That was more than double the $19 billion in auto revenue Tesla reported in the same period.
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Ford sold 501,291 vehicles in the first three months of the year. Tesla delivered 336,681.
So when you are fighting to overtake a bigger foe, every little bit helps.
Last year, Tesla sales jumped 8.8% to a record 657,000 vehicles in China. But despite the strong year, the company’s market share in China fell from 11.7% to 10.4%.
China’s EV industry has shifted into overdrive. The Chinese government has been pushing its citizens to adopt the green technology using cash, tax, and other incentives to get them to purchase EVs and hybrids.
Up until now, Tesla has been excluded from a government initiative to encourage rural Chinese citizens to switch to electric vehicles, but a recent announcement could boost Tesla’s presence in the country.
Tesla is hoping for a brighter future in China.
Image source: Smialowski/AFP via Getty Images
China embraces Tesla in promotional push
On Tuesday, June 3, China’s Ministry of Industry and Information Technology included the Tesla Model 3 and Model Y vehicles in a government-backed campaign to promote EVs in rural areas of the country.
The program has been in place since 2020, but Tesla hasn’t been a part of it until now.
While the Tesla models are just two of the 124 EV and hybrid models that the government is recommending as a sustainable transportation option, their addition is only a good sign for the company.
Now Tesla will be eligible for potential government subsidies and tax breaks that competitors like BYD (Build Your Dream) enjoy.
Tesla could use a shot in the arm.
In late May, BYD, Tesla’s biggest rival in China, launched a new round of price cuts of up to 53,000 yuan (about $7,300) across 22 models.
The move sent shockwaves throughout the industry, as smaller rivals will have trouble keeping up wth the discounts the much-larger BYD can offer. The move was so drastic that the China Association of Automobile Manufacturers (CAAM) and the Ministry of Industry and Information Technology had to issue public warnings about “disorderly price wars.”
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BYD controls 32% of China’s new energy vehicle market, compared to Tesla’s 6.1% market share.
Tesla’s international footprint is shrinking
The Gigafactory in Shanghai makes Model 3 and Model Y vehicles for China and Europe.
Tesla has been marketing in China using the made-in-China mantra, but data shows that production at its China plant is slowing.
Tesla made 58,459 Model 3 and Model Y vehicles at Gigafactory Shanghai in April, a 6% year-over-year decline. This came as demand also fell, wth delivery data also declining in recent weeks.
To fight back, Tesla has been discounting its vehicles in China wth subsidized 0% interest rates and direct discounts.
