Tesla May Change Retail Strategy in China, Moving Showrooms

BEIJING, September 15 (TMTPOST)— Tesla may change the traditional way to focus on promoting vehicles in downtown due to effect of the Covid-19 pandemic.

Source: Visual China

Tesla is working on new ways to sell electric vehicles (EVs) in China, including shutting down some of its showrooms in big cities like Beijing, as traffic there reduced notably amid the Covid restrictions and lockdowns, Reuters cited people familiar with the matter Thursday. Tesla also wants to focus more on retail stores in suburban areas, where cost less than leading cities and are more convenient for customers to visit when they need services such as repair, the sources revealed.

The retail strategy change doesn’t mean Tesla is holding back in its second largest market next to the United States. While Tesla CEO Elon Musk suggested cutting 10% of employees in June, citing “super-bad feeling about the economy”, the U.S.-based EV maker is increasing hiring to improve services in China, the abovementioned sources said.

Tesla didn't respond to the report and told Chinese media outlet that no comment at the moment.

Unlike traditional auto giants, Tesla chooses to open its own retail stores instead of working regular car dealerships. It has so far more than 200 outlets across China since its first one landed in Beijing in 2013. However, maintenance service is not available for more than half of existing stores for spaces in such high-rented locations are too limited.

Tesla has experienced a massive growth in China both the domestic sales and export. Its wholesale shipments in August rose 172.8% month-over-month (MoM) to 76,965 vehicles, consisting retail sales of 34,502 units and export of 42,463 units, the China Passenger Car Association (CPCA) estimated in early of September. The wholesale volume represents a 74% year-over-year (YoY) increase and includes a new monthly record of Model Y with 62,169 units, increasing 261% YoY and 295% MoM respectively.

According to Tesla China, the Shanghai Gigafactory delivered a total of 399,939 vehicles in the first eight months of the year, just about 80,000 units less than the annual delivery last year.

Tesla disclosed in its second quarter financial results that Shanghai Gigafactory made a record monthly production in June, the last month of second quarter, despite the complete and then partial shutdowns for a majority of time in the quarter. The EV giant showed confidence on Shanghai factory’s future performance as it expected recent equipment upgrades would enable it to further increase the production rate.

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