Analysts expect Tesla (TSLA.O) to post another record quarter in China despite growing competition from local rivals like BYD.
According to China Merchants Bank International Securities analyst Shi Ji, the U.S. automaker might sell 155,000 cars in China from April to June, up 13% from its record first quarter.
Shi said BYD and Aion, the EV band of Guangzhou Automobile Group (601238. SS), gained market share, while Tesla’s share fell to 13.7% from 16% in the first three months.
Deutsche Bank expected 153,000 Tesla sales in China and 448,000 globally in the second quarter.
“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 continued.
Tesla will report global and China sales this weekend from association data in the first week of July.
China is Tesla’s second-largest market after North America. At the start of the year, it lowered costs for its two older models, starting a pricing war with competitors like BYD.
BYD expanded its lead with cars under 300,000 yuan ($41,500) while smaller EV players like Nio (9866. HK) and Xpeng (9868. HK) saw China sales drop.
As exports expand, BYD is catching up to Tesla outside China. It outsold Tesla in Singapore and Australia in May.
Tesla will update Model 3 and Model Y to boost sales. The company also seeks Chinese regulator certification for its advanced autonomous driving software.
Tesla is selling China-made cars in Thailand and Malaysia as its Shanghai plant produces over 1 million units annually.
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