Tesla Gets More Major Competition in China

By Douglas A. McIntyre Published Jun 27, 9:15AM EDT

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Tesla Inc. (NASDAQ: TSLA) was once a market share leader in China.
But Chinese car companies are introducing new EVs at a feverish pace.

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Tesla Gets More Major Competition in China — © Xiaolu Chu / Getty Images News via Getty Images

Tesla Inc. (NASDAQ: TSLA | TSLA Price Prediction) was once a market share leader in China, the world’s largest electric vehicle (EV) market by far. In April, its market share dropped to 3.2%, which ranked it eighth among all EV companies in the country. (Another analysis puts it in fifth place.) That figure was down from 4.6% in the same month a year ago. All the EV companies ahead of it in share are Chinese or have Chinese majority owners. Market leader BYD’s share is 29.7%.

Chinese car companies are introducing new EVs at a feverish pace. Some have price points below $10,000. Xiaomi, which is primarily a smartphone maker, just launched the YU7 sport utility vehicle. There were 200,000 orders for the car in the first three minutes it was available.

One sign of how competitive the Chinese market has become is that EVs have not been Xiaomi’s primary business. The company’s shares hit an all-time high after the launch.

Xiaomi will price the YU7 at $35,370, according to the Financial Times. That makes it a direct competitor to Tesla’s Model Y. Chinese companies are aggressively cutting prices to pick up market share. The cuts are so sharp that analysts believe some of the less well-funded companies could disappear.

Tesla’s China problem is only one headache worldwide. European registrations for May dropped 27.9%. Tesla does not release U.S. figures, but it is generally thought its market share dropped below 50% in the first quarter of the year. The market shares of Ford, GM, and Hyundai/Kia are each approaching 10%.

For Tesla’s global sales to be strong, it has to be among the market share leaders in China. That is getting harder and harder to do, based on recent data and new competition.

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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.