Monday , June 17 2024

Tesla to hit record quarterly sales in China even as market share shrinks: analysts


Tesla is set to hit another record quarter with its China sales while it faces mounting pressure from local competitors such as BYD eating into its share in the world’s largest auto market, analysts say.

The U.S. automaker could sell 155,000 cars in China during April to June, an increase of 13% from its record first quarter, according to estimations by Shi Ji, an analyst with China Merchants Bank International Securities.

However, Tesla’s share in China’s battery electric car market would shrink in the quarter to 13.7% from 16% in the first three months, while BYD and Aion, the EV band of Guangzhou Automobile Group, gained share, Shi added.

Deutsche Bank predicted Tesla’s China sales to hit 153,000 units in the second quarter, while globally it could sell 448,000 units in total.

“Tesla has to sell into China’s lower tiered cities to seek further growth, but its direct sales model would be too costly to expand its sales network into hundreds of such cities,” said Yale Zhang, managing director at Shanghai-based consultancy Automotive Foresight.

“BYD, on the other hand, has a big advantage in those markets with dealerships,” he added.

Tesla will announce global sales numbers over the weekend, while China sales will be available from association data in the first week of July.

China is Tesla’s second largest market after North America and home to its biggest factory. It slashed prices for its two ageing models at the beginning of the year to boost sales and started a price war with competitors including BYD following to offer discounts or launch new lower priced models.

While smaller EV players like Nio (9866.HK) and Xpeng were struggling with China sales slumping in recent months, BYD bucked the trend and expanded its lead with its offerings of cars priced under 300,000 yuan ($41,500).

BYD is also catching up with Tesla in markets out of China as its exports grow. It has outsold Tesla in Singapore in the first five months while its Atto 3 outsold Tesla’s Model 3 in Australia in May.

Tesla is planning revamped versions of Model 3 and Model Y to shore up sales. The company is also working with Chinese regulators on the approval of its advanced autonomous driving software to be accessible by drivers in China.

As its Shanghai plant achieves an annual production capacity of over 1 million units, Tesla is selling into new markets in the region including Thailand and Malaysia with China-made cars.

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