Up to 80% of the electric vehicle market in China is controlled by local manufacturers.
According to Bloomberg, Tesla’s marketing policy in the Chinese market is beginning to resemble a satirical sketch about an official who has signs on the table for visitors to “no bribes” and “no smoking.” When a petitioner comes to him with a difficult problem, the official offers him without hesitation: “Let’s start with a smoke.”
Image Source: Tesla
In the case of Tesla’s policy, the Chinese precedent is interesting because in the local market the company began to order advertising on television, which has never been done in any other country in the world in its history. Elon Musk was especially proud that the phenomenal pace of Tesla’s business growth is achieved without the actual cost of advertising products.
Times are changing, and in October Tesla was forced to cut the price of its electric vehicles to Chinese customers. Now, for the first time, the Chinese who buy a car of this brand are also given a $1,100 discount on insurance. The “bring a friend and get a gift” referral program that was active in other markets has also been resurrected. In some cases, such a gift is the right to use the electric car provided by the company for free for a whole year. Even Tesla test drives are now organized in almost any city in China at the request of the client, allowing you to test an electric car for a whole week.
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This unexpected generosity has its own explanation. Firstly, the local market cannot fully recover from lockdowns that reduce the economic activity of the population as such. Secondly, the pace of expansion of electric vehicle production at the Tesla plant in China is clearly outpacing the growth in demand in the local market. In December, according to independent sources, it will be able to produce up to 85,000 cars a month, and local buyers will need 30,000 cars a month at most. It is possible to send the surplus for export, but this increases the turnaround time of capital, so it would be more profitable for Tesla to sell Chinese-assembled electric vehicles within this country.