China is known to be a huge country, and Tesla is massively expanding its presence there with its own Gigafactory, a rapidly increasing number of Supercharger locations and more branches. However, the company is still far from being represented in the country as widely as the dominant German luxury brands Audi, Mercedes and BMW – and according to a recent study, this is a godsend for them. Because in the Chinese cities in which Tesla opens branches, according to the calculations, the market share of the three German manufacturers is decreasing.
Number of Tesla branches in China is still small
“German luxury car brands: Loss of market share in China may get worse,” is the title of the short study by the US investment bank Piper Sandler, which was published in excerpts on Twitter on Monday. The analysts came to this conclusion by comparing the sales of Audi, BMW and Mercedes-Benz (collectively also known as BBA) in Chinese cities with and without a physical Tesla presence.
According to research by Piper Sandler, BMW currently has the highest number of agencies in the important Chinese market with around 600, followed by Mercedes with slightly fewer and Audi with a good 500. The number of Tesla branches, on the other hand, is only a little over 100 ( the numbers can only be read roughly from a graphic).
“Bottom line: whenever Tesla opens a store in a new city, the Germans lose share” | Piper Sandler
— David Tayar (@davidtayar5) January 10, 2021
And even a static analysis based on the average of the past twelve months shows: Where there is no Tesla representative, the relative share of the three German brands in the premium market is higher. In Chinese cities with Tesla on site, the BBA market share is therefore almost 60 percent, in the others around 65 percent.
Local Model 3 costs BBA market share
The observation over time, which goes back to 2017, is even more impressive. Until the beginning of 2020, the difference in the proportion of German premium brands with occasional outliers will remain roughly the same, but then the curves will diverge. In January of that year, Tesla began delivering the locally produced Model 3 in China, and since then the BBA’s lead has been shrinking rapidly in cities with Tesla stores, while it has remained roughly the same in unoccupied locations.
The analysis shows that the situation for Audi, Benz and BMW in China can only get worse, is a conclusion in the study. The Germans would lose where the electric car pioneer opened their own stores – and there was still plenty of scope for more Tesla presences in the country. For BBA, the region, with its historic luxury share of over 60 percent, is of great importance for the three German brands.