Will Tesla Continue To Grow In China?

The challenges are piling up for the EV maker in the world's largest auto market.

Tesla stand riots

  • Tesla's impressive performance in 2020 was mainly driven by car sales in China (TSLA). 

  • Growing concerns about Tesla vehicles' safety and quality spoiled the EV maker's reputation in the country.

  • Other global OEMs are striving to narrow the gap between themselves and Tesla in this promising field.

  • Lidar, Elon Musk's bugbear, is widely recognized among Chinese peers, including NIO and Xpeng (NIO). 

  • Tesla might not necessarily become the 'Apple of EV.'

Taking off in China

Any sound review of Tesla's 2020 success cannot omit its achievements in China. Last year, the carmaker delivered around 500,000 cars globally, approximately 140,000 of which were sold in China. The latter figure tripled on a year-on-year basis. The reason behind the fast growth in China is that, with the Shanghai Gigafactory in operation, the demand for Tesla has been fully released and partially fulfilled. More importantly, Chinese customers show an endless appetite for Model 3 and Model Y. According to our latest analysis, the Palo Alto-headquartered electrical vehicle juggernaut held 16.7% of China's NEV market in March, with a new monthly record of 35,478 deliveries. 

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Will the growth last?

As more Tesla cars have been delivered, a number of media outlets have reported on the concerns regarding the safety, privacy and security characteristics of its vehicles. It is possible that some media coverage was exaggerated to get more traffic. In detail, according to Jiemian.com (link in Chinese), 14 drivers reportedly lost control of their vehicles in 2020, with nine similar accidents reported since the start of 2021. Likewise, in February 2021, the State Administration for Market Regulation, along with the other authority committees, held talks (link in Chinese) with Tesla over issues including abnormal acceleration, battery fires, data security and remote upgrades. More recently, a Tesla owner protested dramatically at a Shanghai auto show for brake issues, leading to a backlash. In short, there are more issues emerging in relation to Tesla vehicles. Despite the mentioned controversies, Tesla’s sales have shown no sign of slowing down in China. We believe the sale momentum will keep at least in the short run. Its reputation, however, has been somewhat spoiled.

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William K. 2 weeks ago Member's comment

Quite a few interesting insights. Thanks for the article.