Will Tesla Continue To Grow In China?

Against the background of diverging public opinion towards Tesla, its rivals are seizing the moment to create more innovative and competitive EV products. The biggest auto player in China, Volkswagen (VWAGY), offered reservations for the purchase of its first battery EV, the ID.4. The classic European brand adopted a similar strategy to leading NEV players, driving direct sales in shopping malls through promotions. VW also gave a 2021 EV sale target of 450,000 units. This goal will aggravate its competition with Tesla in major EV battlefields like China.

Besides, other EV corporations are moving full speed ahead by narrowing the gap with Tesla in all aspects. For example, NIO broke the monthly sales record, following a positive trend.  This OEM is preparing the second generation of swap stations through collaboration with China National Petroleum Corporation. Another EV pioneer, XPeng, launched its third model, the P5, with a competitive price range and advanced hardware. Last but not least, a few companies, including Voyah and Alibaba (BABA), backed by Dongfeng Motor and IM Motor, respectively, gradually rolled out prototype cars and will deliver vehicles within a year. Luxury brands like Audi, Mercedes-Benz (DDAIF) and BMW (BMWYY) are all starting to sell EVs and building infrastructure in China.

Another significant change in the industry is a consensus around equipping Lidar. Many top EV manufacturers announced they will use Lidar in the upcoming models which is clearly the opposite to Tesla. A new argument is that the practitioners believe deploying Lidar will save much more effort than solely relying on recognition by cameras.

The bigger picture 

With more carmakers embarking on selling EVs, Tesla is becoming less likely to be the 'Apple of EV' in terms of market share. Analysts like to compare the EV market to the smartphone market, but there may be a big difference. The automotive market is historically not so centralized as the cell phone landscape. According to Counterpoint Research, the top three smartphone brands, Apple (20%), Samsung and Xiaomi, shipped 50% of total devices in 4Q 2020, and the figure is estimated to be higher in the future. By contrast, Volkswagen Group (14.7%), Toyota Group and Renault Nissan Alliance in total accounted for 38% of light car sales in 2020. So from a historical point of view, the automotive sector might not welcome an Apple-like giant at all.

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William K. 1 month ago Member's comment

Quite a few interesting insights. Thanks for the article.