Tesla's strategy of real-time, active management of its sales force in China gives its stores an advantage over dealers selling BYD and other brands in the world's largest auto market, according to three people familiar with the matter. In the fourth quarter of last year, Tesla ceded the title of the world's largest electric vehicle sales champion to BYD, but in the first 10 months of 2023, both companies have increased their share of China's electric vehicle market.
According to data from China Merchants Bank International (CMBI), Tesla sold an average of more than 1,500 electric vehicles per store in China in the first 10 months of 2023, up from 1,300 vehicles in 2022.
By comparison, BYD sold less than 600 vehicles per store during the same period, including plug-in hybrids, which is similar to its performance in 2022. However, because its best-selling model is half the price of Tesla, BYD's overall sales of electric vehicles far exceed Tesla's, and BYD has 11 times the number of local dealers than Tesla.
Tesla's share of China's electric vehicle market rose to 12% in the first 10 months of 2023 from 10% in 2022, while BYD's share rose to 27% from 21%, according to data from Shanghai-based consultancy Automobility and the China Passenger Car Association.
Tesla's strong sales in China, its second-biggest market, have provided a rare bright spot for the electric car maker. The company warned that high interest rates were impacting car buyers in other key markets such as the United States and slowed plans to build a factory in Mexico.
According to three people familiar with the matter, Tesla, which pioneered the direct sales model globally, monitors its 2,800 sales staff in 314 stores in China every hour to evaluate their effectiveness and efficiency in persuading potential consumers to visit stores, arrange test drives and place orders.
The sources declined to be named because such information about Tesla's sales strategy in China is considered confidential and has never been reported before.
This real-time data collection informs the company's pricing strategy, allowing it to influence demand for certain models and led to seven price increases and three price cuts in China last year, they said. Tesla can then develop a cost-effective production plan based on raw material prices and availability.
One of the people said Tesla manages its employees similarly to Chinese food delivery giant Meituan, which measures delivery times in minutes and seconds.
Tesla has had salespeople fired on the same day because they were deemed insufficiently motivated, the person added.
The company incentivizes employees by offering higher base wages than electric car rivals and allowing top performers to earn up to 30,000 yuan a month, including bonuses, attracting workers from industries known for aggressive sales tactics such as English tutoring and insurance, people familiar with the matter said.
Although Tesla leads its rivals in sales efficiency, analysts warn that Tesla faces growing headwinds amid intensifying competition.
Analysts at CMB International predict that the growing gap with BYD may force Tesla to further focus on improving profit margins in 2024, raising prices for improved models and further expanding into second- and third-tier cities in China, even as its rivals compete to lower the prices of new electric vehicles.