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Tesla in China
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Executive summary
This blog summarizes an explorative study done on the Chinese luxury car market and Tesla Motors in China. Our goal was to identify how Tesla can add value for the customer and succeed in the Chinese market. The recommendations given are based on our own research, but due to limited resources it can’t be generalized.
The luxury sedan industry in China is dominated by the four large German manufactures: BMW, Mercedes, Audi and VW. However, the industry is still growing and the Chinese market is expected to be the world’s largest market for luxury cars by 2017. This growth does still make it possible for newcomers like Tesla to get a foothold in the market. The fully electric vehicles market has historically been slow, but due to a long term political effort and new focus from industry leaders, the growth is now picking up.
The customer in the luxury car segment is high demanding and very quality conscious. Top aspects they look for when buying a car are safety, price and brand. They see Tesla as environmentally conscious and fun but expensive. When they look for information about cars before their purchase, they first and foremost ask friends and family and go to internet forums. When it comes to electric cars, we have experienced that potential customers had concerns when it comes to the lack of charging infrastructure and battery range.
To succeed In the Chinese market, we recommend Tesla to educate consumers about themselves and the values of the company. Specifically in areas as safety, battery range and the increasing Tesla infrastructure where customers don’t have sufficient knowledge. Tesla needs follow up on this and continue with a rapid expansion of charging infrastructure and Service Centers. Besides this, they need to have systems in place to educate their local staff to make sure they can deliver a superior value product to the Chinese customer.
As for geographical expansion, we recommend Tesla to firstly focus on Shanghai, Beijing, Guangzhou, Hangzhou and Xi’an, since these are some of the most populated and wealthy areas of China. When Tesla’s value delivery in these areas is sufficient, we recommend targeting other suitable tier 2 cities. Simultaneously should the charging network be expended both within and between these cities in order to expand the range of Tesla cars.