The factory in Shanghai last December became the first that Tesla built outside its home field in the USA. Until then, there was not a single car-producing plant in China that was fully owned by a foreign company. And Tesla is doing well. This year, thanks to the new factory, it listed 122,000 electric cars and dominated the market here – in its second largest market after the USA. However, domestic competition is increasingly pouring in on her heels.
“Tesla will face more competition in the coming year than ever before. Whether it can defend its leading position in China will be key to its wider growth and revenue, “the agency wrote Bloomberg.
In this year’s sales, Tesla is being prosecuted by Chinese producers or Chinese joint ventures with foreign carmakers. BYD and Wuling have sold over 80,000 electric cars. Other competitors sold tens of thousands of electric cars.
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The numbers are set to rise sharply. The China Passenger Car Association estimates that 1.7 million electric cars will be sold in the local market next year. Of this, Tesla is to account for 280,000 cars – more than double this year.
Tesla plans to increase the annual capacity of the Shanghai factory from 150,000 to 250,000 cars. The reason is obvious. “In China, Tesla sells Model 3 with a higher margin than in the US and Europe. China could account for 40 percent of sales in early 2022. Now it’s 20 percent, “Bloomberg quotes analyst Dan Ives of Wedbush Securities. Tesla wants to bite as much as possible from the growing demand, which is why the production of the local factory is very important.
“China’s global growth will be driven more than ever by Tesla next year,” said Sharon Li, an analyst at JL Warren’s China-focused analytics firm. Nevertheless, Tesla’s position as the number one in the field of electromobility in China is in jeopardy. The same monthly sales in the field of premium brands are already achieved today by local companies Nio, Xpeng and Li, if we add their sales together. And they grow fast. As well as sellers of cheaper electric cars Wuling and BYD. So the threesome and the second market.
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“Tesla and its Chinese competition also face a common threat. And that to conventional carmakers, which are rapidly venturing into the field of electric cars, “Bloomberg points out. Volkswagen wants to compete in the Chinese market thanks, among other things, thanks to the recently introduced pair of models of sports-utility SUVs of the ID.4 series. BMW manufactures Mini electric vehicles in China through a joint venture with China’s Great Wall Motor, and Toyota has also entered into a joint venture with domestic BYD for the development of electric vehicles. There are many examples.
Tesla is trying to strengthen its position, for example, through newly opened contact centers in smaller Chinese cities. At the beginning of next year, it is also to build a factory for chargers for electric cars with an annual capacity of ten thousand pieces for about 140 million crowns. It already operates five hundred fast charging stations on Chinese roads, and this network is set to expand several times in the coming years.
The Chinese government has previously set an ambitious goal. The share of cars sold on alternative propulsion – not only on electricity – should account for a quarter of all sales by 2025. This year, the government has reduced the target to twenty percent. Electric cars currently sold account for five percent of the entire car market in China.
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After the shock caused by the coronavirus pandemic, car sales in China rose in November for the eighth month in a row, the local association CAAM said. From January to November, car sales fell by 2.9 percent. However, sales of electric cars increased by 3.9 percent over the same period.
The Chinese Ministry of Industry and Information Technology expects sales of all alternative cars, not just electric, to rise to more than 1.3 million this year. Last year, 1.2 million of these cars were sold.
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