In terms of real-time strategy and sales efficiency in China, Tesla surpasses BYD

In terms of real-time strategy and sales efficiency in China, Tesla surpasses BYD

In terms of real-time strategy and sales efficiency in China, Tesla surpasses BYD

In the fourth quarter, China's BYD overtook the US business as the world's largest seller of electric vehicles; nevertheless, throughout the first ten months of 2023, both companies grew their market shares in the fiercely competitive and sluggish Chinese EV industry.

Three sources with knowledge of the situation claim that Tesla's aggressive management of its sales personnel and real-time approach in China are providing its shops an advantage over dealerships supplying BYD and other brands in the biggest car market in the world.

In the fourth quarter, China's BYD overtook the US business as the world's largest seller of electric vehicles; nevertheless, throughout the first ten months of 2023, both companies grew their market shares in the fiercely competitive and sluggish Chinese EV industry.

at the first ten months of 2023, Tesla sold an average of more than 1,500 electric vehicles (EVs) at each of its Chinese outlets, up from 1,300 in 2022, according to data from China Merchants Bank International (CMBI).

In contrast, BYD sold less than 600 vehicles per shop in 2023, including plug-in hybrids, which is comparable to its performance in 2022. Nevertheless, altogether, it sold far more EVs than Tesla, its best-selling brand. This model costs eleven times as much as the previous one, which was half that much. There are all of the regional distributors.

"Although Tesla has a higher throughput per store, their growth is restricted, particularly in comparison to BYD," said Bill Russo, the CEO of Automobility, a consultancy organization located in Shanghai.

According to statistics from the Automobility and China Passenger Car Association, BYD's share in the China EV market increased from 21% to 27% over the same time in 2023, while Tesla's share increased from 10% in 2022 to 12% in the first ten months of 2023 as its lower-tier competitors struggled.

A rare bright light for the electric vehicle manufacturer, which has warned of the effect of rising interest rates on car purchasers in other big countries like the US and is preparing to establish a plant, is Tesla's strong sales performance in China, its second-largest market. Planning is moving more slowly. in Mexico.

The carmaker, which invented the direct sales model globally, pays hourly attention to 2,800 sales representatives working in its 314 stores in China. They evaluate whether prospective customers are interested in visiting the stores, set up test drives, and determine how successful they are at persuading customers to place an order. Three individuals said.

He asked not to be named since the details of its China sales plan are proprietary and have not been released before. An inquiry for comment from Tesla was not answered.

According to the sources, the company's pricing strategy is informed by the real-time data collecting it does. This allows it to affect demand for certain model variants, which led to seven price spikes and three reductions in China last year. Based on the costs and availability of raw materials, the business may then create cost-effective production schedules.

According to one of the sources, it measures delivery times in minutes and seconds and treats its employees similarly to Meituan, a massive Chinese food delivery company.

The individual said that Tesla salesmen were fired the same day for not being assertive enough.

Known for aggressive sales practices, English said that the firm rewards top performers with incentives up to 30,000 yuan ($4,203.56) per month. The company also offers greater base pay than its competitors in the EV market. draws employees from sectors like insurance and tuition. said some folks.

Alternative sales strategies

With approximately 3,400 locations, BYD has a more conventional strategy when it comes to dealerships, offering both battery EVs and plug-in hybrids. It offered dealers incentives of up to 2 billion yuan ($279.52 million) if they met a 3 million unit worldwide sales goal by 2023.

An inquiry for further information was not answered by BYD.

The achievement of Tesla's economical and successful direct sales approach, according to Yale Zhang, managing director of Shanghai-based consulting automotive Foresight, cannot be simply replicated given its leadership in goods, technology, and reputation.

After first adopting a direct sales network akin to Tesla, the US automaker's smaller electric vehicle competitor Xpeng is altering its sales approach.

However, it is uncertain whether Tesla will be able to sustain its sales efficiency given the age of its model range, particularly as it expands into lower-class cities and towns where Chinese brands are more prevalent among dealers. Indeed, Zhang replied.

Tesla's main shop in Beijing, China, closed its doors in 2022. In Guangzhou, it shut down four outlets in the last quarter of 2023.

It is growing in second-tier cities like Tianjin and Chengdu, where monthly average car sales per shop are 163, more than in first- and third-tier cities, according to CMBI. In 2023, Tesla intends to open around 3% of its stores in secondary cities. 0 new shops were opened, an almost 20% increase.

fierce rivalry

Despite outperforming competitors in terms of sales efficiency, experts have warned that Tesla is facing increasing challenges in the face of fierce competition.

"Bragging about efficiency is an instrument for AutoMobility to position its own performance," said OKScreen's Russo, "to gloss over the fact that their revenues are not growing at the rate utilized by some of their competitors."

The primary obstacle to Tesla's efforts to overtake BYD in total sales is the factory's limited capacity in Shanghai, which is the company's biggest worldwide and can produce 1.1 million vehicles annually.

Although Tesla has said that it wishes to expand the factory, the proposal is still pending clearance from Chinese officials who are hesitant to approve the addition of additional EV manufacturing facilities due to a capacity deficit.

The business intends to develop a new plant in Mexico in addition to expanding existing Berlin facility. However, BYD has been far more active, constructing EV facilities in nine Chinese cities with an annual capacity of more than 4 million units, as well as other operations abroad.

As of late March, Tom Zhu, the company's global production leader, said that Tesla could produce two million cars annually.

The widening gap with BYD, according to CMBI analysts, may compel Tesla to concentrate on increasing its margin in 2024. This may include raising the price of updated models and expanding into more affordable Chinese cities. Even its competitors are finding it difficult to cut the cost of their new EVs.