Tesla, the American electric vehicle powerhouse, has made headlines once again with its recently refreshed Model Y, securing around 200,000 pre-orders in China. This development comes as Tesla aims to bolster its presence in the competitive Chinese market with the introduction of the Cybertruck later this year. However, reports from inside China paint a very different picture for Trump's right hand man.
On January 10, Tesla launched pre-orders for the updated Model Y, which quickly amassed a significant number of orders nationwide. Local media outlet 36KR reported that Tesla salespeople in Beijing were adding nearly 100 new orders daily since the pre-order launch.
Despite this high volume of orders, visits to Tesla stores in Beijing's key districts – Dongcheng, Chaoyang, and Daxing – appeared sparse, with no waiting required for test drives, indicating a peculiar trend of high orders amid low foot traffic.
A noteworthy aspect of these orders is the substantial number of them that were refundable. Initially, Tesla's pre-order page for the Model Y listed the deposit as refundable, a term that was later removed when the model began delivery on February 26. In the first week following this, over 6,000 units of the Model Y were delivered, as stated in the report.
The updated Model Y was introduced with two variants under the ‘Launch Series' label, which included a rear-wheel-drive version starting at RMB 263,500 (£30,492) and a long-range all-wheel-drive version from RMB 303,500 (£35,120). This special series was available until February 28, offering an additional two-year or 40,000-kilometre extended warranty for early buyers.
From March 1, Tesla began selling the regular versions of the new Model Y at non-discounted prices and without the Launch Series' extended warranty bonus. The delivery wait times for these models vary, with the rear-wheel-drive version requiring 2-4 weeks and the long-range version 6-10 weeks – according to Tesla's Chinese website.
Despite the brisk pre-order activity, Tesla's sales team has voiced concerns about the practicality of purchasing the Full Self-Driving (FSD) package, which is priced at RMB 64,000 (£7,401). The recent software update introduced advanced assisted-driving features resembling FSD, sparking excitement. However, Tesla personnel recommend against purchasing the FSD package outright due to its high cost and the current performance of the assisted-driving features, which are based on non-local data.
In the broader context, Tesla China sold 30,688 vehicles in February, including domestic sales and exports. This figure is in stark contrast to Tesla's average monthly sales – which have typically hovered around 67,000 units. That represents a significant decrease from previous months. The overall market dropped 5%, so Tesla's drop is significantly larger.
This dip reflects the broader challenges Tesla faces in the market, from the rising popularity of low-cost local competitors to fluctuations in global demand influenced by wavering climate commitments from countries like the USA.
Elon Musk, Tesla’s CEO, is likely pinning hopes on the new Model Y to revitalise Tesla's flagging fortunes in the electric vehicle sector, especially with the anticipated launch of the Cybertruck. While the pickup truck market in China is relatively undeveloped, the innovative and futuristic design of the Cybertruck may attract a younger demographic, rekindling interest in the brand.
That said, there are now reports appearing online from some Cybertruck owners about Tesla's choice of build materials. Aluminium is a fantastic material and it saves weight Vs steel, but it does not have the same resistance to metal fatigue. If buying a Cybertruck for leisure, then you are unlikely to see a difference, but could the continual flexing of a Cybertruck's structure (when used in a commercial environment) lead to issues?
Tesla's journey in China is emblematic of its global strategy, balancing innovation with market challenges. The surge in pre-orders for the Model Y highlights the brand's strong appeal, yet the reliance on refundable deposits suggests a cautious consumer base. As Tesla rolls out new models and updates, the automotive giant will need to navigate the complexities of consumer preferences and competitive pressures in a rapidly evolving market.
As the electric vehicle landscape continues to shift, Tesla's strategies in China will provide critical insights into the adaptability and resilience of global brands in foreign markets.
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