Has Tesla lost its luxury social status in China?


Can Tesla hold its own in China, or will growing competitors overtake it? Jing Daily took a look under the hood to see what’s going on.

While the fight for flying cars may still be up in the air, China’s desire for cars that actually drive on the road is very real-especially in the market for electric cars, or e-vehicles. The State Council of China predicts that sales of electric, hybrid and hydrogen cars will grow from 5 percent in 2020 to 20 percent by 2025.

So far, Tesla has been king. Its Model 3 has been one of the top three best-selling electric cars in China since launch and continues to outpace its competitors with similar pricing. However, despite Tesla’s early dominance in the market, the U.S. innovator has had a number of missteps lately, and its fortunes on the mainland may be changing for the worse.

In April, a protest broke out at the Shanghai Auto Show over Tesla‘s faulty brakes. Since then, Chinese media and netizens have reported various incidents on social media platforms, emphasizing safety. The recall of more than 700 Model 3s delivered to China follows a previous recall of tens of thousands of cars over the past few months. Then add to that data security issues; and although Tesla established a data center in China in May 2021, the Chinese government still has concerns about the company.

In addition, domestic Chinese electric car brands, such as the leader Nio, as well as Xiaopeng, Geely and Wuling, are applying pressure and taking their share away from the growing pool of conscious consumers in the country. They are also moving beyond China: Nio is expected to enter the European market in the third quarter of 2021, followed by Xiaopeng.

In April, domestic tech giant Huawei, better known for its cell phones, launched its first car in collaboration with high-end electric car brand Jihu, which offers an autonomous driving system and app integration. On Huawei’s announcement, Wang Xin, founder of the Meituan delivery platform, said, “Tesla has finally met a rival with equal technical power.”


Whether Tesla has met its rival remains to be seen, but it is reported that sales in May were up nearly 30 percent. So despite the roll call of problems, Tesla seems safe in China. But for how long? Jing Daily took a look under the hood.

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Is Tesla gradually losing ground?

When Tesla began, it created an innovative product that caused a market shock. The models were all-electric, with incredibly fast acceleration and the longest range of any electric car on the market. They were also notable for their reliability and safety, and the Model S was considered one of the safest cars ever made.

According to Dr. Daniel Langer, CEO of Équité, which specializes in luxury brand strategy, Tesla positioned itself as a savage, daring to push the boundaries of what cars can be. “Owning a Tesla car was cool, it was a statement,” says Langer, “and the high prices of the Model S and X made it very exclusive and gave the brand a superiority similar to owning a Porsche, only in the 21st century.

That undefined awesomeness was reinforced by “providing customers with a superior experience,” such as the Model X’s big touchscreen and falcon doors. But when the company moved to more affordable pricing, everything changed. Delays, as well as service center congestion due to a surge in customers, caused Tesla’s exclusivity to begin to decline.


“The launch of the new Roadster was delayed for several years. Then the launch of the new Model S was delayed, and the new Model S and X focused only on interior design. As a result, the exterior remained virtually unchanged, which disappointed many potential buyers who wanted an updated exterior design after nearly 10 years of the Model S,” Langer noted.

Problems in China

In China, consumers can choose from a huge number of foreign and domestic car brands and models. And while Tesla was once a trailblazer, competitors have now either caught up with it or evolved. Fierce local competition comes from Nio and Xiaopeng motors, said Arnold Ma, CEO and founder of Qumin. “As battery replacement technology becomes more widespread, Tesla simply won’t be able to compete with the battery station footprints of domestic companies.” Nio, a domestic favorite in the luxury arena, is using battery replacement technology, a strategy Tesla is avoiding. Another problem is the loss of specific demographics. Porsche has a strong customer base in China, which is dominated by young people, women and the tech-savvy.

Tesla, on the other hand, has not been able to find common ground with women. Some domestic car brands have begun to attract young female drivers, such as Wuling. Among current users of its Hongguang MINI EV (which has held first place in the Chinese new energy market for nine months in a row), women make up more than 60 percent. The company now has a separate group of fans who call themselves “Wuling Girls”.

These young women share videos of their cute “tricked-out” cars and communicate on social platforms such as Douyin, Little Red Book and Kuaishou, which have accumulated more than 100 million views and likes. Wuling has also partnered with local companies such as HeyTea and YOHO!, Pantone Universe and China’s Elle magazine to drive sales among young consumers.

While these consumers may not be Teslas, their behavior provides insight into bases that are often overlooked, as well as the growth of consumers with “Guochao pride.” Even the cult of the provocative billionaire Elon Musk, the scandalous CEO-tech entrepreneur behind the company, cannot quench China’s desire for local names.

How Tesla can hold its own in China

With C-Class cars increasingly gaining advantage in its home country, it will be crucial for Tesla to continue to be the boldest company in both design and innovation. Innovation in design is necessary, as many Tesla fans are leaning toward the sleek Porsche Taycan – some believe its exterior design is more exciting than the outdated Model S design.

Localization is also necessary. Adapting the products on offer to local tastes in some practical ways, such as adding more comfortable and spacious rear seats, will demonstrate consumer understanding (American luxury car brand Cadillac did this in China, for example). But beyond these changes, the bigger picture lies in the “brand experience.”

“This is where Tesla needs to add significantly, especially in China,” Langer believes. “This is where Nio is setting the benchmark in customer service and customer focus. Tesla stores were initially disruptive, and Nio homes have taken service to another level.” Tesla also does not have a good social presence in China, which can be a disaster for brands, as both good and bad news can spread like wildfire on the mainland.

Ma explained that compared to the west, social sentiment in China is concentrated in “one time zone, one language, with more than 1 billion users.” Therefore, “Without a local social strategy, it will be difficult to reverse the negative sentiment. Like peer recommendations, or guanxi culture, social success in China is also much more directly related to customer perceptions.” Tesla’s PR attitude needs work, too. Dissatisfied netizens’ opinions after the Shanghai Auto Show were met with a less than appealing response. “Chinese consumers care about whether Tesla respects them and how it solves problems, but the brand has handled customer complaints about issues such as brake failure poorly,” Ma continued.

Indeed, Ma suspects that Tesla exists to “inspire local companies to accelerate EV adoption and encourage consumers to adapt the new EV trend, not as a solution or long-term manufacturing brand in China.” In this case, he believes, the company will retain its luxury features and positioning.

Regardless, it’s important that Tesla be perceived as a brand that offers consumers the future – whether flying or self-driving cars. It’s too early to write Tesla off: one month’s sales can’t dictate a complete decline. But what’s not so clear-cut is that international labels must respond to serious local opposition; turning that into an opportunity is vital. Langer concludes: “With the advent of competition, it’s time to get buyers even more interested than ever before.”

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