Tesla in Chinese Electric Vehicles Sector

Executive Summary

Tesla’s primary purpose is accelerating the world’s transition to renewable energy. The business’s mission since its establishment in 2003 has been to provide mass-market Electric Vehicles (EVs) with appealing value propositions and prime benefits that feature a long battery life, energy efficiency, low pricing, and excellent functionality without compromising design (Daxue Consulting). Gasoline car pollution mostly wreaks havoc on the environment (Chen and Zeng 947). Thus, the company aims to assist customers in shifting toward alternative energy. Tesla’s Model S and Model X are aimed at the premium sedan and SUV segments (Daxue Consulting). In comparison, the Model 3 and Model Y are aimed at the mass automotive market.

China is an important market for the automobile industry, particularly for EVs, because of its large consumer base and powerful central financial system. Tesla is international, but China is the most significant market for mid-sized luxury sedans (Daxue Consulting). Hence, Tesla believes that by pricing the Model 3 on the level with gasoline-powered mid-sized sedans, the country may become the Model 3’s largest market. In China, Tesla does not have a traditional marketing plan strategy. Essentially, the corporation has no marketing department. According to Elon Musk, Tesla’s creative marketing plan includes a $0 marketing budget; nonetheless, even without a budget, several features distinguish Tesla’s marketing strategy in China. Tesla strives to improve the customer experience; employees should be EV industry specialists (Daxue Consulting). The firm focuses on producing high-quality goods and relies on customers to sell the vehicles by connecting with one another.

Strategic Objectives

Tesla’s strategic objective is to develop affordable mass-market electric vehicles. Marketing goals include obtaining a competitive advantage over local rivals, satisfying consumer demands and expectations, and increasing brand awareness. The mission is to enable people to transition away from reliance on gasoline cars and toward the goal of zero emissions. The business goal is to gain Chinese customers’ trust and loyalty through the safety, technology, environmental friendliness, and intelligence of Tesla EVs (Liu and Zhou 356). Firstly, the company intends to increase its portion of the world’s largest EV market via cutting-edge technologies (Daxue Consulting). Secondly, Tesla avoids China’s requirement that foreign automakers establish joint ventures with Chinese manufacturers. Finally, the corporation aims to protect the intellectual property incorporated into its expanding EV portfolio. Tesla aspires to build a strong brand image and please investors and consumers with products that display high performance, usability, design, and prestige to gain market share.

SWOT Analysis

Tesla’s cutting-edge scientific research team and superior technology are primary strengths. The company’s revolutionary battery and rapidly changing technologies fill a power battery gap and establish a solid platform for the distinction of Tesla products (Du and Li 1685). Second, Tesla has achieved vertical integration in the value chain, which allows Tesla to maintain precise management over fixed costs and assure fast product updates and iteration (Du and Li 1685). Furthermore, Tesla has a countrywide direct sales network in China, and supercharger stations have been planned and progressively deployed, providing Tesla with a hardware foundation for market development.

In terms of weaknesses, Tesla, as a well-known company, has frequently found itself in the center of public opinion. Although the corporation has reaped some marketing benefits, it also allows negative Tesla news to be easily magnified in the Chinese market (Du and Li 1685). Another unavoidable issue is that Tesla, as a foreign firm, has limited influence over the Chinese market (Du and Li 1685). Additionally, the company’s vehicles’ frequent braking failures in 2021 have prompted buyers to assume that it poses a safety risk (Liu and Zhou 360). As a result, another Tesla disadvantage is its lack of endurance.

China offers tremendous opportunities for Tesla’s expansion and development. First, the Shanghai Gigafactory will assist Tesla in achieving localization. The development of the facility enables the company to produce in China, significantly lowering shipping costs and tariff obstacles (Liu and Zhou 360). Second, increasing consumer environmental consciousness will aid in promoting electric vehicles (Liu and Zhou 360). Finally, Tesla may benefit from Chinese government subsidies for the new energy car business.

The threats include supply chain problems, existing competition, and new market entrants. Tesla is also experiencing supply chain issues, as the majority of Tesla’s parts are produced by other firms (Liu and Zhou 360). Many businesses will likely be interested in the EV sector, which has obvious growth opportunities (Du and Li 1686). Hence, the company faces substantial pressure from competitors and new entrants.

STP Analysis

Potential Tesla electric vehicle consumers in China include those who care about the environment, are enthusiastic about new technology and market trends, and are interested in the brand’s status and reputation. Despite the ability to purchase local electric vehicles at a lower cost, potential buyers have loyalty and trust in the Tesla brand, its worldwide development, and its beneficial environmental effect. According to the Fuels Institute, middle-aged people earning more than $100,000 per year, with higher education and at least one additional car in their family, make up the majority of EV owners (1). Nonetheless, the EV buyer age may normalize with the broader new vehicle purchasing trend, making EVs more affordable.

As a result, Tesla should target new client categories, such as younger individuals. Vehicles’ simple design is one of the critical reasons for the company’s challenges in China (Dai and Zhang 828). Tesla’s models fade into the background compared to other domestic businesses’ new energy cars. In contrast, others provide a choice of vibrant colors and attractive appearances that correspond with the aesthetic of China’s youthful generation (Dai and Zhang 828). Because they constitute most of the Chinese consumer market, they are more willing to adopt new types of products that meet their expectations.

Tesla vehicles are more aesthetically pleasing to older generations and cannot attract many potential purchasers. Tesla should redesign its automobiles to reflect the aesthetics of today’s youth (Dai and Zhang 828). The company’s new electric cars can therefore be further enhanced in China. The message to customers should emphasize the environmental benefits of utilizing EVs while also promoting new technology and innovative designs. Thus, it is vital to investigate customers’ needs and preferences regarding the design of Tesla’s models.

Marketing Mix

Tesla has enhanced technology in terms of the product itself. Liu and Zhou state that Tesla’s primary models include the Model S, Model 3, Model X, Model Y, and the Cybertruck (357). The models are mostly sedan and SUV in design, with the Cybertruck presently being an MPV. The ES6, ES8, EC6, and ET7 are NIO’s major products, with the ET7 being the only sedan (Liu and Zhou 357). Nonetheless, according to the current threat of new entrants, Tesla should develop new models based on market trends and customers’ preferences; thus, the target audience will perceive them as valuable enough to purchase.

Tesla’s pricing strategy fluctuations are common in China. The company’s pricing approach is to charge varied prices for its products based on the consumer’s capacity to pay and performance (Liu and Zhou 358). Tesla is employing penetration pricing to broaden the client base, allow the product to dominate the market swiftly, and dissuade competitors from entering (Liu and Zhou 358). The corporation should guarantee that the electric vehicles are top performers, with technology superior to regular gasoline automobiles. Thus, the potential buyers will believe they obtained an excellent bargain.

Tesla’s place plan in China deviates from the usual 4S shops of the Chinese automobile sector. Instead, the firm controls experience stores directly, which are run and maintained by Tesla (Liu and Zhou 358). Tesla’s promotional approach revolves mainly around pricing. The company’s primary promotional techniques appear to be price reduction campaigns. Because frequent customers do not benefit from the preferred pricing approach, the consumer’s perception of purchasing experience will suffer (Liu and Zhou 358). Thus, promotion techniques may include educating clients about the benefits of Tesla and employing social media. Additionally, the promotion via social media and special events will assist in developing unique images and atmospherics. The personnel influences sales significantly, and because Tesla employs direct sales, the employees should be trained in providing the best customer experience.

Performance Evaluation Metrics

The business will know it has achieved its marketing objectives when its sales and market share in China substantially increase. The company’s market penetration is vital; it is defined as its share of the market’s customers and can signify whether the company succeeds. Moreover, Tesla could measure monthly sales growth; it is also vital to employ marketing metrics such as the total number of conversions or, in other words, website visitors who are interested in Tesla’s vehicles.

Works Cited

Dai, Xinran, and Haoyang Zhang. “The Opportunities and Challenges of Tesla’s Entry into Chinese Market.” 2022 7th International Conference on Social Sciences and Economic Development (ICSSED 2022). Atlantis Press, 2022, pp. 823-829. doi.org/10.2991/aebmr.k.220405.138.

Daxue Consulting. “Tesla in China: Domination the EV market with 0 budget.” Daxue Consulting, 2022.

Fuels Institute. “EV Consumer Behavior.” Fuels Institute Organization, 2021. Web.

Liu, Jinpeng, and Shiyun Zhou. “Analysis of China’s New Energy Vehicle Market Competitive Strategy: Taking Tesla and NIO as Examples.” 2022 7th International Conference on Social Sciences and Economic Development (ICSSED 2022). Atlantis Press, 2022, pp. 356-267. doi.org/10.2991/aebmr.k.220405.058.

Shen, Chang, and Qiwei Zeng. “Research on the Marketing Communication Strategy of Tesla Motors in China under the Background of New Media.” 2022 7th International Conference on Financial Innovation and Economic Development (ICFIED 2022). Atlantis Press, 2022, pp. 947-951. doi.org/10.2991/aebmr.k.220307.155.

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BusinessEssay. (2024) 'Tesla in Chinese Electric Vehicles Sector'. 21 December.

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BusinessEssay. 2024. "Tesla in Chinese Electric Vehicles Sector." December 21, 2024. https://business-essay.com/tesla-in-chinese-electric-vehicles-sector/.

1. BusinessEssay. "Tesla in Chinese Electric Vehicles Sector." December 21, 2024. https://business-essay.com/tesla-in-chinese-electric-vehicles-sector/.


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BusinessEssay. "Tesla in Chinese Electric Vehicles Sector." December 21, 2024. https://business-essay.com/tesla-in-chinese-electric-vehicles-sector/.