WSJ Tech News Briefing Tesla Was China’s Favorite EV Brand. Now It’s Stuck Playing Catch-up
Tesla's Declining Market Share in China
- Tesla's market share in China's new energy vehicles dropped from 11% in 2021 to just 4% in May 2024.
- Local brands like BYD and Xiaomi have overshadowed Tesla, impairing its competitive position.
Why Tesla Is Losing Its Grip on the Chinese Electric Car Market
Tesla's market share in China has sharply declined, dropping from 11% in early 2021 to just 4% in May 2024, overshadowed by fast-rising local competitors like BYD and Xiaomi. The Chinese market is crucial for Tesla, as it's their second largest by revenue and a major production and export hub, especially as sales are slowing in the US and Europe.
Elon Musk's strategy to counter this involves launching a more affordable Tesla model next year, but employees and analysts express concerns that this stripped-down version may not compete well without significantly lower prices.
Chinese consumers view Tesla as aging and out of touch, especially compared to domestic brands offering modern features like smart home connectivity, with Tesla's China staff urging headquarters to prioritize localized features—requests that have so far been dismissed.
Meanwhile, Beijing's relationship with Musk has cooled due to his fallout with President Trump and a stronger emphasis on domestic champions, which further complicates Tesla's position in China.
Tesla as a Market Catalyst 'Catfish'
- Beijing initially welcomed Tesla to invigorate China's nascent EV market as a 'catfish' that fosters competition.
- Over time, domestic competitors and supply chains have matured, now surpassing Tesla in strength.