Tesla Beats Ford and GM at Their Own Game in China

By Douglas A. McIntyre Updated Jan 30, 11:31AM EST · Published Jan 7, 6:50AM EST

Follow 24/7 Wall St. on Google

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

Tesla Beats Ford and GM at Their Own Game in China — © danielvfung / Getty Images

As is true with both major car companies and niche manufacturers, China is the future. It was supposed to be not only the largest market but one that would grow rapidly for years. The United States and Europe would be eclipsed in their importance. However, the growth in China has reversed. Many of the world’s largest car companies are in trouble there. At the same time, it appears that Tesla Inc. (NASDAQ: TLSA) is an emerging winner. It was not supposed to be.

Ford Motor Co. (NYSE: F | F Price Prediction) and its China partners posted a 30% drop in unit sales to 131,060 during the third quarter. General Motors Co. (NYSE: GM) reported 2019 full-year China sales down 15% to just over 3 million units. GM is the second-largest foreign car company in China. The problems of these two car companies come from model lineups that are not just unpopular but unlikely to be replaced quickly enough with new vehicles to change results this year.

Tesla is not only selling cars in China; it is making them there. Elon Musk has even said he will create a car for the Chinese market, and perhaps export it, something none of the large car companies has done. Another advantage for Musk is that making cars in China means it will not have to pay tariffs. That will become more important if the trade war between China and the United States worsens.

While there is skepticism about Tesla’s China future, optimism otherwise has driven the stock to another all-time high. Tesla’s market value is almost equal that of GM and Ford combined. One reason is that Tesla was not expected to sell several hundred thousand cars in the United States, ever. That forecast has been proven wrong.

Tesla’s success continues to be a miracle for some industry experts. It was supposed to be too small to beat large car companies with big balance sheets and dealer networks. That turned out to be untrue in the United States. The first indications are that it will not be true in China either.

[nativounit]
[recirclink id=605680]
[wallst_email_signup]

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.