Tesla gains a competitive advantage in the world’s largest auto market, China, by implementing a real-time, proactive management approach for its sales staff. This strategy sets Tesla apart from dealerships representing brands like BYD, providing an edge in the highly competitive automotive landscape, as reported by three individuals familiar with the matter. This real-time collection of data lets the U.S. company better judge supply and demand, allowing it to make pricing changes more quickly than rivals like Chinese carmaker Geely (GELY.HK), which had to make seven price hikes and cuts in 2023, one of the people said. It also lets the company plan production based on raw material prices and supplies, reducing costs for its EVs.
The company also has a solid social media presence in China, where it uses community engagement events and local partnerships to showcase its lineup. These efforts are designed to educate the public on the advantages of electric vehicles and encourage them to consider a Tesla for their next purchase. In its first ten months of 2023, the company sold more EVs in China than BYD did in the same period.
However, while Tesla is well established in the United States and Europe, it is still a newcomer to the Chinese electric vehicle market and has yet to build a brand as strong as its rivals. In contrast, Chinese automaker BYD has a global presence and has built a strong reputation for its technology and quality in foreign markets, including Europe.
BYD’s relentless advance has been unaffected by COVID-19 lockdowns and supply chain woes that have slowed the rest of the car industry. It is poised to become a significant competitor to Tesla in the premium segment, offering two luxury models. It also has a battery business, which could be critical to its future as governments worldwide seek to ban the sale of cars powered by internal combustion engines.
BYD is trying to turn its success in the domestic market into global dominance despite barriers such as Western protectionism and concerns about Chinese technology. It has already made inroads into cost-sensitive markets such as India and Southeast Asia, where it is the most significant player, and its 2023 results showed strong demand for its cheapest EVs, the Atto 3.
While favorable government policies and subsidies have helped BYD’s growth, it must cut costs and ramp up production to challenge Tesla globally. That may prove difficult if it can’t secure enough cheap lithium to power its batteries at scale, a key constraint. A shortage of the metal is expected to hit EV production across the globe this year. That could crimp production for the industry and push up prices.