Tesla trumps BYD in China with real-time strategy

Read Time:4 Minute, 24 Second

Tesla is the world’s largest EV maker but it has struggled to win the Chinese market for a long period of time. But now the scenario is changing, Tesla is giving high competition to BYD to win the Chinese market.

Tesla
(Image source – Autocar)

Table of contents

  1. What’s the news?
  2. Secret of Tesla’s growth
  3. Conclusion

What’s the news?

According to three people with knowledge of the matter, Tesla’s aggressive and real-time management of its sales staff in China is giving its stores an advantage over dealerships offering BYD and other brands in the largest auto market in the world.

China’s BYD overtook the American company in the fourth quarter as the world’s largest seller of electric vehicles, but both businesses increased their market share in the first ten months of 2023 in an increasingly competitive and slowing Chinese EV market.

According to data from China Merchants Bank International (CMBI), Tesla (TSLA.O) sold an average of more than 1,500 electric vehicles (EVs) in each of its Chinese stores in the first ten months of 2023, an increase from 1,300 in 2022.

Comparatively, BYD sold fewer than 600 vehicles per store in 2023, including plug-in hybrids, which is comparable to its performance in 2022. Nevertheless, overall, BYD sold a lot more EVs than Tesla considering that its best-selling models are half as expensive and have 11 times as many local distributors.

BYD sold fewe
(Image source – Carwale)

According to data from Automobility and the China Passenger Car Association, as its lower-end competitors faltered, BYD’s share of the China EV market increased to 27% from 21% during the same period, while Tesla’s share increased to 12% in the first ten months of 2023 from 10% in 2022.

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A rare bright spot for Tesla, the electric vehicle manufacturer has slowed plans to build a factory in Mexico and warned of the impact high-interest rates will have on car buyers in other important markets like the U.S., is its strong sales performance in China, its second-biggest market.

The carmaker, which established the direct sales model globally, tracks the effectiveness and efficiency of its 2,800 sales representatives in each of its 314 stores in China on an hourly basis, evaluating their ability to convince prospective customers to visit the stores, schedule test drives, and place orders, according to the three individuals.

They chose not to reveal their identity since such information is considered confidential and has not been previously disclosed regarding its China sales strategy. An inquiry for comment from Tesla was not answered.

According to the people, the company’s pricing strategy is informed by this real-time data collection, which enables it to affect demand for specific model versions and led to seven price increases and three decreases in China last year. Based on the costs and availability of raw materials, the business can then create cost-effective production schedules.

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According to one of the people, it treats its employees like Meituan, the massive Chinese meal delivery company, which clocks deliveries in at the minute and second.

The same day, Tesla salespeople who were deemed to have not been sufficiently active were let go.

The company incentivises its staff by offering a base salary higher than EV rivals and allowing the best performers to earn up to 30,000 yuan ($4,203.56) a month including bonuses, drawing workers from industries such as English tutoring and insurance known for aggressive sales tactics, the people said.

With its 3,400 locations, BYD approaches dealerships in a more traditional manner and offers plug-in hybrids in addition to battery electric vehicles. It offered dealers incentives of up to 2 billion yuan ($279.52 million) if they met a target of 3 million units sold globally by 2023.

Secret of Tesla’s growth

Keeping aside the rivalry of Tesla and BYD in China, one thing we need to appreciate is the growth of Tesla all over the world. But how?

Let’s decode how this Elon Musk-led company is ruling over the EV sector –

1. Use of modern technologies like AI –

Although the electric vehicle (EV) industry is largely responsible for Tesla’s success, the company’s development and integration of artificial intelligence (AI) is the most compelling part of its long-term value proposition.

Think about driverless vehicles. Although there is still a long way to go before Tesla renders drivers obsolete, the company has made significant progress in terms of how its full self-driving (FSD) software is trained.

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2. Personal Brand of Elon Musk –

Tesla is one of the most popular automobile brands in the world and the majority of this popularity is driven by Elon Musk.

Elon Musk
(Image source – Slate.com)

Elon Musk is surely one of the most popular people in this world, and his personal brand is bigger than many celebrities. This popularity of Elon Musk drives a lot of growth for the company.

Conclusion

The competition of the EV industry in China will get more intense with this and it will be a tough fight as Tesla is the “shark of the ocean” but BYD is also the “crocodile of the Yangtze”.

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