According to the China Passenger Car Association (CPCA), Tesla, the U.S. automaker, delivered 72,115 electric vehicles made in China in October. This figure is 2.6% lower than the previous month’s delivery. However, the sales of China-made Model 3 and Model Y cars slightly increased by 0.6% from the previous year. In contrast, Chinese rival BYD delivered 301,095 passenger vehicles in October, which is a 5% increase from September and a 38.4% increase from the same month last year. BYD’s gross margin in the third quarter was 22.12%, making it Tesla’s biggest Chinese rival in terms of market leadership.
Tesla has been prioritizing sales over earnings, especially in China, where the company has been facing increasing competition from local rivals. Tesla’s market share in China’s EV segment shrank to 9.89% in the third quarter from 12.98% in the second quarter and 9.93% a year earlier. In order to boost its market share, Tesla has been offering aggressive discounts, which have negatively impacted its margins.
The company missed third-quarter estimates for gross margin, profit, and revenue. It also failed to meet third-quarter forecasts for its global deliveries due to planned factory upgrades for a revamped version of the Model 3.
Although foreign brands such as Japan’s Mitsubishi Motors and South Korea’s Hyundai Motor have taken steps to wind down or scale back on their operations in the world’s largest auto market, domestic automakers have been making more progress. For example, Huawei-backed EV brand Aito has been receiving a lot of attention lately thanks to its revamped M7 model, which garnered more than 50,000 orders within the first 25 days after its launch in mid-September.