China Loves Cheap, Locally-Made Electric Cars, Tesla Far Too Expensive To Be Successful There


The vast majority of electric vehicles sold in China are locally made and relatively cheap. That doesn’t bode well for Tesla who has neither of those qualities going for it and has had difficulties living up to initial sales expectations in the country.



As Reuters reports:

“More electric cars are sold in China than in the rest of the world combined, but are mainly locally-branded models that are cheaper and have a shorter range than those offered by foreign automakers such as Tesla and Nissan.”

“The domestic EVs don’t have the ‘wow’ factor of a fast, longer-range and luxury-style Tesla. They sell on price.”

In 2016, sales of plug-in electric vehicles (including commercial vehicles and buses) crossed 500,000 in China, but relatively few of those sales went to outsiders likes Tesla.

One of China’s hot electric cars in the Chery eQ. After subsidies, it sells for just 60,000 yuan ($8,655). Compare that to a Tesla or Denza (BYD/Daimler joint venture brand) which sell for 300,000 to 600,000 yuan and you can see why the luxury models struggles against their much cheaper competition.

BYD Qin EV300

BYD Qin EV300

Quoting Xie Chao, an employee at a chemical company in Shanghai:

“EV cars are very cheap (in China), you’ll only spend a little money to buy a car. If you just go to work or use an EV in the city, it’s OK … for using within 100 kms (62 miles),” said Xie Chao, who works for a chemical company in Shanghai.”


Qu Lijian, a 31-year-old government worker in Beijing, sums up the situation rather well, stating:

“I only considered BYD and BAIC. I definitely can’t afford the 300,000-600,000 yuan price of a luxury-style Tesla or Denza.”

He eventually purchased a BYD Qin.

You can be certain Tesla wants a large chunk of the Chinese market, but it simply can’t offer an EV that’s priced low enough to grab a decent share of sales. That’s okay though, since Tesla seems to be doing just fine in terms of sales elsewhere around the globe, but eventually in roads will have to be made into the world’s largest EV market.

Source: Reuters

Categories: China

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53 Comments on "China Loves Cheap, Locally-Made Electric Cars, Tesla Far Too Expensive To Be Successful There"

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This is the same in the USA. The low priced LEAF sells more than Tesla. Yet Tesla is still sold out and moving into the lower priced area with the model 3. I bet the China EVs will become bigger and more expensive.
Examples of this are in every auto maker. Look at the small light low priced Beetle, It got BIG and cost more with the Super Beetle. Same for the FORD Mustang and many others.

Tesla never wanted the sub- $10,000 Chinese car market. That is what is missing in this story. China’s average new car price.

I think the Sub $10,000 Car Market in China, would be about like the sub $20,000 Car Market in USA & Canada – the primary Market for the Most Cars! That Said – I remember Elon Saying he would not go lower in Price than the Model 3, so there is that to deal with! I would still hope, that that attitude would change, by the time he has GF2, GF3, and GF4 in Operation! While it is Nice to have Electric Pickups, Mini-Buses, and Semi’s, as well as School Buses, Motor-homes, and Limos, for places like China (& India) the Desire to Accelerate the move to sustainable transportation, may still require Tesla to go Further Down Market – than the Current $35,000 Price Point of the Model 3! I can understand – not going lower than the Price Point of the Model 3, until the Next few layers of Master Plan 2 are in place ( Mini-Bus, Pickup, and Semi), and until Gigafactory 2 (GF2) is well on its way to completion, but to not take the challenge to the other automakers in that lower priced field, might stall their own push to that space! They are about 3-5… Read more »

It’s not a question of a need to go ‘down-market’ it is just one of size. Even the M3 is still a relatively large car. VW (quick ‘Sign of the Cross’) does the very diminutive e-Up! (and Polo, FTM) both most definitely ‘small cars’ but neither, in any way, ‘down-market’ and this is a *big* section of the car market in Europe and elsewhere in the world (tho not, I concede, in the US). Taping into it would do Tesla no harm at all.

Recent sales figure shows Tesla sells more than Leaf. If the price is all-driving factor in US, iMiev would be the biggest seller.

Some see Tesla is as luxury car. Then psychologically, some (many?) would buy it to flaunt their wealth, just like many who drive high end luxury cars. This is no different in China, US or anywhere else in the world. There will always be a market for higher tier brand and higher performance cars that cost more. Reuters article completely misses the point.

Well, to be fair, even the LEAF upgraded it’s basic Charging rate from the 3.3 kW level to at least 6.6 kW, while Mitsubishi did no such think for the 5 years of the iMiEV! Nissan worked on making their battery Better, then – Bigger, and now have added 25% to the same cars capacity – while the iMiEV – still has the same 16 kWh Battery! (Even a bump up to 20 kW would have kept it better in the running, but – it by now should have been able to fit 24 kWh in that same space, and make it a real 100 Mile Range EV! (Well – Maybe Almost – since 62 Miles * 1.5 = just 93 Miles, but that is at least as good as the Kia Soul EV!) I know they seem to have done some small price drops on that car since 2011, but an EV today with Half the Range of the LEAF, maybe now should be at nearly half the Price? Imagine an iMiEV (Still with the same 16 kWh little Battery) going out the door for $16,000 – $18,000 MSRP! That would give the smart ED a run for its… Read more »

True, but with autonomous driving fleets and scale of production allowing more rideshare vehicles being available all this may work well for tesla as well.

More S and X’s are sold than LEAF’s.

Yeah, but that’s North American sales only. The Leaf has more of an international market than Tesla does.

Also, the most recent sales figures for the Leaf probably say more about how Nissan hasn’t upgraded the Leaf to keep up with the competition, than they do about Tesla’s sales growth.

Reuters: Wake up and smell the Coffee!!!

BYD Tang – 2016 Best Selling Plug-In in China, #3 in the World.

Specs: PHEV, mid to full size SUV (Think Porsche Cayenne), 18kWh battery, 80 kms e-range, 500 hp combined power, 0-100 kms/h in 4.9 Secs.

Price: 48.000 USD

Sure, it’s no Tesla Model X, but it is far better and more expensive than the picture that Reuters tried to make on Chinese EV’s and superior to anything legacy OEMs have to offer in the SUV front.

It may well be that Tesla will never be able to meet the sales goal it had for China sales before it actually started selling cars there; that proved to be overly optimistic. But to say “Tesla Far Too Expensive To Be Successful There” rather strongly implies that Tesla isn’t making a success at selling in China.

This is simply not true. Tesla certainly is successful at selling cars in China; it’s just not as successful as it originally planned to be.

Elon at least once talked about setting up an auto assembly plant in China, which is what the company would have to do to avoid the onerous tariffs and red tape that make foreign cars so expensive and difficult to buy and own in China. I haven’t seen any quote from him lately about that, and now he’s talking about putting Tesla’s second auto assembly plant in Europe.

So perhaps Tesla is not currently making plans to expand their Chinese market. If they are, they’re keeping mum about it.

Also, Tesla is by far (3 to 1 ratio) the best selling foreign plug-in brand in China, so if Tesla is unsuccessful there, what about VW, BMW…

After the markets slapped around the stock with the reveal of master plan part two and solar city merger, tesla had been very careful not to put out any capital intensive future plans.

Tesla sells more cars in China than China sells in the U.S.

LOL! Well that’s a pretty low bar to overcome. Does China currently sell any street-legal, highway capable, 4-wheeled cars in the USA… or any other first-world country? So far as I know, they don’t sell a single model in that category outside China and third-world countries.

Yeah, I know: That was your point.

I think this is where the originally planned model IV was aimed, but (I guess given a USA perspective on the world) it was deemed unnecessary because people could uber out their Model III’s if they wanted to save. Not a “rest of the world” perspective at all. I believe Elon has decided he has done his job and is letting all the others fill in the gaps.

This is the first I’ve read of any “Model IV” from Tesla. Would you please cite a source on that?


It’s all right though, model 3 will bring prices down by quite a bit, plus don’t forget Tesla is selling extremely well in Hong Kong and other more well to do areas of China.

The shorts buy some alt-news.

This was always going to be a tough nut for Tesla to crack, their protectionist laws make it impossible to succeed unless you get into bed with another Chinese company.

On top of that you are going to have to be able to produce cars very cheaply which almost certainly means manufacturing them in China rather than importing them (apart from the battery perhaps !).

It’s early days, the jury is still out as to wether it will be a resounding success in China for Tesla but so far so good.

China is a big enough market to support anyone. Last time I was there, there were tons of expensive Audis and BMWs around.

Another (Euro) industrial point of view

Tesla is very successful in China in its category, that is luxury cars. Once you position yourself in that category best you can do is keep your car expensive otherwise it hurts the brand. Generally I do believe that Tesla will keep being a “BMW” of the EV production. I can’t imagine why they would inflict themselves the pain to fight for low margin markets when their brand is so strong. OK for model 3 but somehow I would be very surprised to see Model 3 sold below $40K (before incentives) to be more than a very tiny proportion of overall model 3 sales.

Only of you are looking at EV sales. It is not successful at all in the general premium/luxury car competition in China.

Another (Euro) industrial point of view

OK, I admit not knowing that. It is rather difficult keeping things fact based with all what is related to Tesla.

I don’t see Tesla going downmarket either. But it’s not just because of the current market conditions. It’s also because of the future. Tesla’s heavily invested in building up through driver assistance to Level 5 autonomy. If it’s successful, the mainstream market would likely shrink substantially.

Maybe Tesla will create a subsidiary brand that produces cheap electric cars overseas and market them under a different name to catch the low priced EV wave in China? And maybe north America? One of the selling points (and reason for their high price) is that they’re assembled in the USA. So a different brand would allow them to still keep that “made in America” stamp, but also make low cost EV sales? Just throwing ideas out here.

I can easily believe that Tesla might do that in the future. They just don’t have any plans to do so at present.

Elon said “A lower cost vehicle than the Model 3 is unlikely to be necessary…”

This statement has been unfortunately paraphrased as “Tesla will never make a car lower priced than the Model 3.” That’s really beyond what he said; see his statement in context at link below:

thanks. I was getting pretty angry thinking they dismissed the idea of a cheaper model entirely.

there’s still the 1 percenters in china, and there are more there than in America so sales will be just fine. Believe me a business executive doesn’t want to be driven around in those crappy cheap EV’s. lol

Of course, I think that is Tesla’s real problem. The back seat lacks headroom. If you are being driven everywhere that’s a major headache.

Agree on the limited back seat headroom, having ridden there, as I am 6’3″, and I can see the benefit of a 12″ stretch, more leg room, bigger back door, holding the high roof line further back, etc., and not just for the Chinese market – but even in Europe, USA & Canada, Mexico – etc! Could make room for another 10-20 kWh worth of Battery Space, too!

peteybabes said:

“there’s still the 1 percenters in china, and there are more there than in America so sales will be just fine.”

Exactly! Yes, Tesla has only a tiny piece of the luxury car market in China. But it’s a very big market! So while Tesla’s market segment is tiny, its sales numbers are certainly sufficient to make it worthwhile selling cars there. And that’s why the headline of this article is wrong to assert “Tesla Far Too Expensive To Be Successful There”.

Seems that Chinese are doing quite fine on their own, they actually don’t need some Euro American c.ap loaded with overpriced batteries that will become obsolete in less than 2 years. They can produce batteries themselves but actually need highly competitive wireless charging systems to support their extensive low range EV fleet. That’s sth what European as well as American tech companies have figured out developing wireless systems and prepping to launch in China. Such comps will fare way better than Tesla in China, as among all countries around the globe China is the best suited for wireless.

Last time I visited China I saw a Tesla being charged by a portable diesel generator, which seemed to go against the whole idea of electric cars.

Well, maybe he figures, if it works for Freight Trains, it can work for him, since most trains in out of the way places and not in Europe, use the Diesel-Electric Locomotives, so his logic is OK that way – and I would guess – after charging – it still drives better than a Diesel Powered Audi!

But – yes, it is a bit defeatist to go about it that way!

Tesla’s not after the cheap car market – yet. They’re after the Mercedes luxury vehicle market. Half of all S500’s built are sold in China. THAT’S what Tesla is after.

Ev sales in China by number of sales:

1. BYD Tang – $45k-$76k (base to fully loaded)
2. BYD Qin – $30k
3. BYD e6 – $54k
4. BAIC e-series (a number of different models) – Base price $32k for the cheapest e-series EV, base price $50k for the most expensive model.
5. BAIC EU260 – $37k
6. Geely Emgrand EV – $33k

That is the top 36% of the sales. Base price average at ~$40k.
If that is considered cheap then people have too much money.

The Chinese luxury car market is also the worlds largest. If Tesla is not selling there it has very little to do with the price…

It doesn’t help that China slaps a hefty Tariff on every Tesla shipped in.
Whay doesn’t that come up in this article?

A Tesla in China cost exactly the same as a Tesla in Sweden.

(⌐■_■) Trollnonymous

Enlighten us on why that is……

The point being that there can’t be hefty fines in China since Tesla sells for same price across the world (+country specific fines).

No, the point is that those “country specific fines”, or rather tariffs, taxes and fees, make a rather large difference in Tesla’s penetration of the luxury car market segment in a given country. China’s excessive red tape for imported cars is a negative influence on sales, too.

Whether or not the final sale price, including tariffs, taxes, and fees, is as high in Sweden as it is in China, is rather irrelevant. Sweden is notorious for having high taxes. The point is that once those tariffs, taxes and fees are included, the sale price in China is absurdly higher than it is in most countries.

No they don’t. They are the same for every foreign automaker, which are dominating the high end segment.

Taxes on cars in Sweden are the same as most places in Europe. I could have said same price in UK/Germany/France etc.

So the tariffs will not make a big difference for Tesla in China.

On the contrary the other luxury manufacturers have a much higher markup in China so if anything they should sell a lot more than the regular competition since the Tesla is a lot cheaper.

So other factors are hindering Tesla in China. Maybe lack of status, lack of quality, not good enough back seats etc.

Price and tariffs is not a hindering factor.

cant wa8 till PRES TRUMP slaps a tarriff on those china dumping practices. ENUF *FAIR TRADE*

I hope you are just trolling.

I don’t think it’s realistic for Tesla to gain a huge market share in China. It never was. Even companies with more savvy to the Chinese market than Tesla showed at the start would never be able to reach a large (percentage-wise) audience in China.

Tesla’s aim is surely more of an Apple-style presence in China. That is, they don’t capture the broad market but they sell at a premium to a small but lucrative slice of the market. And Tesla is still the best-positioned company to do this. Even starting off on the wrong foot they have adjusted their tactics and are now producing good results with this type of market strategy.

As pointed out above, China tariffs imported cars anyway, Tesla could never compete head to head there without building in China and right now it’s probably not worth risking the type of industrial espionage which would occur if they did so.

They’ll never be king of China but in the end they don’t need to be.

You have some good arguments there, but on the other hand GM’s largest market is now China.

I assume GM is more successful in China than Tesla because GM has partnered with Chinese auto makers to assemble cars there. China is trying hard to force all foreign auto makers to do the same.

China is GM’s largest market, but that’s just because China is large.

I spoke of market share in China, you’re trying to reverse this to numerical sales across the world.

China is a large market and that’s why even having a small part is great for Tesla as long as they make money on what they sell (and they do!). But Tesla will never be a big player in the Chinese market. GM barely a big player even counting all their joint ventures as one group. And those joint ventures sell almost exclusively cheap domestic cars. And of course they don’t send all their profits to GM either.

Anyway, it’s not really worth fighting over I don’t think. I just laid out what I think is the right move for Tesla. I easily could be wrong.

The word “Loves” in the headline should be replaced with “Makes Due With”. From talking with my Chinese relatives, they know that the Chinese brands are cheaper, with lower quality, absolutely sold on price. I don’t think that’s quite the market Tesla is going for, so I’m not convinced they will be negatively affected. It’s two different customers, two different markets.

The good news is that, just like here, people that drive EV’s tend never to go back to gas. Cheap Chinese EV’s are the necessary entry point for future mass adoption as people move up the economic ladder.

Or better yet: “makes do with”.

Those “locally made” Chinese EVs barely fit two 5′ 2” Chinese and a shopping bag, run on lead acid batteries and have the crash rating of a wet paper bag. That’s why they are so cheap.

If/once EV drive train and batteries are as ubiquitous as ICE, then you will see great changes. What I mean is every ICE car has pretty much the same range give or take a few miles. Of course there are exceptions, but no one thinks about range overly much when they think about an ICE. They think about efficiency as that affects their spend on fuel, but they don’t think about range for the most part.

With EV’s we are still talking about range. When that changed then I think it will really take off.

Tesla is a new company, at the moment they are chasing the luxury market and very soon the middle class market, but if they last the long term then it is almost certain they will chase the budget market as well. Pretty much every other manufacturer has a presence in all these markets, even if they promote them under different brand names. Maybe the budget manufacturer for Tesla will be called something different, but it will still be the Tesla company.