Marketing Analysis: Tesla's Strategies in the Chinese Market

This report provides a comprehensive analysis of Tesla's entry into the Chinese market, examining various aspects of its marketing strategies and performance. It delves into Tesla's initial production in China, the challenges faced in a competitive EV market, and the impact of government subsidies. The report analyzes Tesla's marketing approach, including its campaign strategies and organic social media efforts. It also discusses the company's market share, the response of the market, and the factors contributing to its growth, such as the Model 3's success. Furthermore, the report highlights the competition from local brands and the significance of the Shanghai Gigafactory. The analysis incorporates key insights from market reports, financial data, and industry publications, offering a well-rounded view of Tesla's success in China and its future prospects.

Marketing

Marketing 1
Contents
Tesla entrance to Chinese Market..........................................................................................................2
Marketing point of view........................................................................................................................2
Market share..........................................................................................................................................2
The response of the market....................................................................................................................3
Campaign..............................................................................................................................................3
Growth...................................................................................................................................................3
References.............................................................................................................................................5
Appendices............................................................................................................................................7

Marketing 2
Tesla entrance to Chinese Market
Tesla is an American electric automobile producer. The organisation was established in 2003
to advance an electric sports car. Tesla is a wholly-owned company in China. Tesla has put a
significant emphasis on China. Tesla started doing production in China in October 2019 and
it is the first segment of the company outside U.S. China has welcomed Tesla with the hope
to get a lift from an interest in new energy vehicles. Tesla has decided to offer Model 3 cars
in its Shanghai factory in January 2020. The company could face a lot of challenges in the
Chinese market comprising a cooling electric vehicle (EV) market and increasing rivalry.
China also remains a ‘swing factor’ for Tesla’s stock and it lately marked a high record
(Zhang, 2020). The government has provided subsidies to cut the price of Model 3 in China.
Initiating manufacturing in China, assisted Tesla to evade import tariffs on its cars in China.
After Shanghai’s Gigafactory, Tesla has decided to set up a new design and research center in
China for serving one of the major markets for its electric cars.
Marketing point of view
The initiatives taken by the Chinese government towards EV, grants and venture capital cash
has assisted spawn masses of start-ups in China. The brands like Xpeng Motors, Nio and WM
motor are trying to produce the EV in China. The executives at these start-ups are
anticipating Tesla’s access to the Chinese market give them a lift too. The market conditions
of China for Tesla are quite suitable for the production point of view (New Horizons, 2020).
It will assist tesla in appealing to more buyers and buyers will look into EVs. Tesla will have
tough competition with WM cars. A push of Tesla will have both challenges and prospects
for Chinese players. Tesla will be much bigger in the Chinese market than any of the brands
in terms of market capitalization and the number of cars offered worldwide. When it comes to
the opposition, Tesla will have majorly two competitors, WM Motor and Xpeng (Valikangas,
2018).
Market share
The performance of Tesla will be thoroughly viewed by the investors who anticipate a big
evolution prospect for the stock. In January, the company hit with a high record of $454 last
week. The performance in terms of the market share has been assisted by the element that the
company beat market approximations for vehicle deliveries in the 4th quarter. It is believed
that China remains the foremost blow influence in the stock and eventually having worth
between $75-$100 per share to tesla’s valuation with Giga 3. It has been estimated that tesla

Marketing 3
is going to have a nice position in 2020 and the momentum stock could go higher (Financial
Times, 2020).
The response of the market
The expansion of Tesla in China has never been easier. Tesla is among the EVs that Chinese
customers want to buy. Tesla is having a robust demand in the main market. The company’s
deliveries to factual, actual individuals are rising at the triple-digit pace than being hamstrung
by import duties. The purchase of EVs in China has been majorly made by unrecognized
buyers and fleets. When it comes to market response, the sales by the Chinese buyers is
increasing. Tesla has been successfully attaining market share in China at a slow speed. The
market response is well known for the fact that Tesla’s sales are more than 175% as
compared to the same period last year. The insurance registrations have a great role in
assessing Tesla deliveries. But it still assists to track demand. More of the growth of Tesla in
China is being obsessed with its cheaper Model 3. On the other side, the demand for Model S
and Model X vehicles has been reduced by almost 25% for the months (CNBC Markets,
2020).
Campaign
Tesla is relied on the organic social media by reinvesting in the product advancement. Tesla
is communicating in China through marketing products and long-term service offering
through the involvement of a driving school. The company is insisting on assisting people to
make full utilization of their cars. Tesla is also establishing a premium experimental
marketing campaign. It involves racing events, track days, DJ soundtracked parties in
showrooms and association with Tencent’s QQ music. The company also promoted itself
with a series of stickers to be used in several popular chat apps (Chen, et al. 2020). Other than
this, it has been found that Tesla is already exporting to China from 2014. The significant
revenue from China makes Tesla a leading electric car.
Growth
The cheaper model of Tesla, Model 3 in China has been credited with increasing revenue by
42% in the first 6 months. The direct sales model of Tesla is a substantial departure from the
franchised dealership model of other marques. This way Tesla posses the channel touchpoints
and data and causes the potential advantages for the new product advancement. Tesla has
revealed that it has already installed tooling in its China factory for the manufacturing volume
of 150,000 yearly which is equal to the company’s 40% of Tesla’s current yearly global

Marketing 4
deliveries. Although it takes sufficient time for vehicle production rates to grasp full speed
the company has attained high-volume production even before its Model 3 at its factory in
California. Therefore, Tesla is likely to be capable of ramping up production its Chinese
made Model 3 faster than the U.S made version. It has been anticipated that the Gigafactory
of China will be producing at scale by the end of 2020 (Fox business, 2020).

Marketing 5
References
Bloomberg Businessweek, 2019. Elon Musk Set Up His Shanghai Gigafactory in Record
Time. Available from https://www.bloomberg.com/news/articles/2019-10-23/elon-musk-
opened-tesla-s-shanghai-gigafactory-in-just-168-days [Accessed on 13/04/2020]
Chen, J., Zhang, Y., Li, X., Sun, B., Liao, Q., Tao, Y. and Wang, Z., 2020. Strategic
integration of vehicle-to-home system with home distributed photovoltaic power generation
in Shanghai. Applied Energy, 263, p.114603.
CNBC Markets, 2020. China could be the ‘swing factor’ for Tesla’s stock as first Model 3
cars roll out to Chinese consumers. Available from https://www.cnbc.com/2020/01/07/tesla-
model-3-china-rolls-out-to-customers.html [Accessed on 13/04/2020]
Financial Times, 2020. Tesla turns up heats on rival carmakers in China. Available from
https://www.ft.com/content/3d1b44aa-20ac-11ea-92da-f0c92e957a96 [Accessed on
13/04/2020]
Forbes, 2020. Tesla Is Changing China: Will China Change Tesla? Available from
https://www.forbes.com/sites/panosmourdoukoutas/2020/01/21/tesla-is-changing-china-will-
china-change-tesla/ [Accessed on 13/04/2020]
Fox business, 2020. Tesla planning to design ‘Chinese-style’ cars at China-based research
center. Available from https://www.foxbusiness.com/technology/tesla-china-design-
research-center [Accessed on 13/04/2020]
New Horizons, 2020. Expansion to China has never been easier. Available from
https://nhglobalpartners.com/china/?utm_term=%2Bmarket%20%2Bentry
%20%2Bchina&utm_campaign=EN+
%7C+Company+Incorporation&utm_source=adwords&utm_medium=ppc&hsa_acc=476988
0301&hsa_cam=8473747132&hsa_grp=85984568363&hsa_ad=404764020840&hsa_src=g&
hsa_tgt=kwd-467313326815&hsa_kw=%2Bmarket%20%2Bentry
%20%2Bchina&hsa_mt=b&hsa_net=adwords&hsa_ver=3&gclid=Cj0KCQjwm9D0BRCMA
RIsAIfvfIatR6MUmAPbcxho9l30qw8VodqVUgOqHG-
Pfxu4po3T0rDUpPfzEMAaAphqEALw_wcB [Accessed on 13/04/2020]

Marketing 6
Valikangas, L., 2018. Forum on Tesla and the global automotive industry. Management and
Organization Review, 14(3), pp.467-470.
Zhang, J., 2020, January. Is it a good choice to invest in Tesla?. In 2019 International
Conference on Education Science and Economic Development (ICESED 2019). Atlantis
Press.

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Appendices
[Bloomberg Businessweek, 2019]