Tesla's new car registration in China is rise at a staggering rate

Chinese car industry is in a major slump, with momentum expected to slow further as a broad economic slowdown becomes more pronounced.

Sales of vehicles last year in China decreased by 8.2%, to 25.769 million units, according to data from the China Association of Automobile Manufacturers (CAAM). Car sales in China in 2019 declined for the second year in a row. Prior to this, a decrease in vehicle sales was recorded in 1990.

In December, sales declined for the 18th consecutive month - by 0.1% compared with the same month of the previous year, to 2.7 million cars. The pace of decline in car sales in China slowed in the second half of 2019, CAAM noted.

Sales of vehicles powered by new energy sources (NEV) decreased by 4% to 1.21 million, which CAAM explains as a reduction in government subsidies for the sector. The decline in car sales in China began against the backdrop of the abolition by the country's authorities of tax benefits for buyers of new cars, as well as a general weakening of the economic recovery in the context of a trade war with the USA.

But despite this difficult situation for all automakers, the registration of new Tesla cars in China last month again rose to the highest level since March 2019.

Photo: Yang Hui/GT

According to state-backed China Automotive Information Net, which collects industry data based on insurance purchases, the number of Tesla registered vehicles rose to 6,643 in December. The total number of Tesla registrations in the Chinese market has reached 42,715 in 2019, compared with 16,360 in 2018.

Tesla, just like many other automakers, is not new to the Chinese market: it has been delivering cars to people since 2014. But, unlike other automakers, it offers people the product that they want and which meets their requirements. That is why Tesla's cars are so in demand.

Some analysts point out that Tesla can actually help screen out poorly performing companies in the oversaturated Chinese market. In China, more than 480 manufacturers of electric vehicles are registered. Several of them have raised billions of dollars of funding over the past few years, sparking the ghost of an industrial bubble.

This has caused the government to sharply reduce incentives to buy electric cars. This decision actually leads to fierce competition in pricing, according to analysts from Anbound, a Beijing-based research firm.

Fortune Securities analysts believe that Tesla can create a “benchmark” for local brands that will try to match them. In a research note, they compared Tesla to a “catfish” capable of agitating things, noting that the company has more “advanced technology and brand recognition.” Since Tesla is able to lower its costs and sell cars at lower prices, this will encourage companies selling cheaper cars to improve their products.

Tesla is the most recognizable brand of electric vehicles in the world, and its CEO Elon Musk is a generator of bold ideas and has a non-standard management style.

With the launch of the MIC Model 3, Tesla’s popularity in China has grown significantly. 2020 promises to be very saturated with sales of company's automobiles to Chinese consumers.

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Featured image: Reuters