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Jun
2015

Luxury Cars March 2014

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Tesla leads the electric charge

US electric car brand Tesla has attracted a great deal of attention worldwide, including China where it has seen a steady increase in sales recently. The brand is constantly expanding its global network. The media and consumers in China started talking about the product design, the concept, the car, and the price, well before it entered the country. Finally, at the end you 2013, Tesla launched its Chinese website and opened its first presence in Beijing.

On 17th March 2014, according to a statement from Tesla’s Global Vice President Wu Bixuan, China is currently ranked first across the globe in terms of weekly orders. As part of its expansion strategy for the huge China market, the manufacture plans to open experience stores in 10-12 cities throughout 2014. The Shanghai experience store will open in the middle of this year, followed by Chengdu, other planned cities include Guangzhou, Shenzhen and Hangzhou.

Why the popularity in China?

Why is Tesla so popular in China, a country where big cars with big engines have been the choice of the wealthy for the past ten or more years, it doesn’t fit the profile?

The core positioning of Tesla in China is not about being an electric car, but a super cool car! This is very important to a specific consumer group. So how is it cool in China?

The first element is to be a sports car. In general for the Chinese, if a car can accelerate to 100 km/h in less than 5 seconds, it will be regarded as a supercar and basically these cars are cost 1.5 million RMB or above. So the Model S which is currently available in China delivers zero to 100 km/h in 4.2 seconds so its very cool.

Being a pure electric vehicle is another sales point. The educated Chinese know they need to protect the environment, and due to rising fuel prices, the car is attractive. The fact that it only requires a four and a half hour charge via a household power socket to travel 400km also makes it practical. They also see the car as more useable than other electric vehicles because the interior space is not taken up by batteries as it is for other options.

Tesla is being called the ‘Apple’ of the car industry by the media for advocating extremely simplified designs. Just like Apple, the user experience of every detail of the car is of the highest level. Its automatic retractable door handles, and all the functional control buttons on a 17-inch LCD screen replacing the traditional control panel are very attractive to the tech savvy Chinese consumer.

In terms of its marketing, Tesla has used a community-based approach to build its reputation. It focused on celebrities, movie stars and opinion leaders, making them the first customers and influencing the general public. Although Tesla has not released any information about its buyers as part of its brand promotion, buyers will do this themselves and could not help the urge to spread the message of Tesla ownership across their circle. Influential opinion leaders and owners include Lei Jun, the founder of MIUI mobile, Ji Shisan the CEO of Guokr.com, and Zhuang Chenchao the CEO of Qunar.com.

Of course, perhaps the most important factor for many is that as a supercar a Tesla is relatively cheap. In December 2013 the official price of the Tesla Model S was 734,000 RMB, 48% higher than the U.S. list price and 43% higher than that in Hong Kong, mainly due to the extra 30% tax and unlike elsewhere in the world the car does not enjoy any subsidy policy in China. Even so, the price is still far below the pre launch estimated price expected by many automobile experts of 1 Million RMB. Most other international luxury brands such as BMW, Mercedes, Porsche, Land Rover have a 100% difference in price between their domestic and China prices so Tesla actually looks very reasonable to the Chinese consumer.

A further sales point making Tesla special in the Chinese market has also earned it respect amongst Chinese consumers! It is not using the traditional 4S store and distribution network, but rather a direct sales model approach. This model will keep the sales price stable and avoid the current situation where consumers are forced to pay extra money to get their car delivered immediately.

Unlike the perception of other international brands that are seen as regarding Chinese consumers as rich and silly, Tesla are regarded as using reasonable positioning and fair pricing for both domestic and overseas consumers which has made Chinese consumers feel respected. They are no longer paying much more but getting less.

According to Tesla ‘The price of Model S in China market is much lower than its competitors purely because we want treat Chinese consumers in the same way that we treat our other consumers in the rest of the world. What we respect as fair, is price transparency, and to promote the China’s electric car industry, and to treat every customer in a right way no matter where he/she lives.’


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