Social status

Has Tesla lost its luxury social status in China? | Marketing

While the battle for flying cars may still be unresolved, China’s desire for cars to actually drive on the road is very real, especially in the hotly contested market for electric or electronic vehicles. The Chinese State Council predicts that sales of electric, plug-in hybrid and hydrogen vehicles will increase from 5% in 2020 to 20% by 2025.

Until now, Tesla has been king. Its Model 3 has been ranked among the top three best-selling electric cars in China since its launch and has continued to outperform its similarly priced domestic competitors. However, despite Tesla’s early dominance in the market, a number of missteps have besieged the American innovator and his fortunes on the continent may well turn south.

In April, a protest erupted at the Shanghai Auto Show over Tesla brake failures. Since then, Chinese media and internet users have reported various incidents on social media platforms, emphasizing security. A recall of more than 700 Model 3s shipped to China followed an earlier recall of tens of thousands of vehicles in recent months. Then add data security concerns; and although Tesla has established a data center in China, as of May 2021, the Chinese government still has concerns about the company.

On top of that, Chinese electric car brands like leader Nio, as well as Xiaopeng, Geely and Wuling are pushing and taking their share of the growing pool of conscious consumers in the country. They are also leaving China: Nio is expected to enter the European market in the third quarter of 2021, followed by Xiaopeng.

In April, local tech giant Huawei – best known for mobile phones – released its first car in collaboration with premium electric car brand Jihu, which offered an autonomous driving system and in-app integration. . During Huawei’s announcement, Wang Xing, the founder of the Meituan delivery platform, said, “Tesla has finally encountered an opponent with equal technical strength.”

Huawei and Jihu (Arcfox) are teaming up to launch a smart car that enables autonomous driving. Photo: Jihu Weibo

It is not yet known whether Tesla has reached its level, but sales in May are said to have increased by almost 30%. So, despite the roll call of problems, Tesla appears safe in China. But for how long ? Jing Daily takes a look under the hood.

Is Tesla slowly missing the mark?

When Tesla was launched, it created an innovative and disruptive product that rocked the market. The models were fully electric, with incredibly fast acceleration and the longest range of any electric car on the market. It also offered reliability and safety, with the Model S being considered one of the safest cars ever made.

According to Dr. Daniel Langer, CEO of luxury branding firm Equity, Tesla has positioned itself as a maverick by daring to push the boundaries of what cars could be. “Owning a Tesla was cool, that was a statement,” Langer said, “and the high prices of the Model S and X made it a very exclusive experience and gave the brand a cool top touch, akin to owning. of a Porsche, just for the 21st century.

That undefinable freshness was bolstered by “giving customers a superior experience,” like the Model X’s large touchscreen and Falcon doors. But when the company turned to more affordable pricing, that changed. Delays, along with overwhelmed service centers due to sudden growth in customer numbers, caused Tesla’s exclusivity to begin to wane.

The Tesla Model X impresses consumers with its hawk-wing-shaped doors, which make charging easy, and its sleek center display. Photo: Courtesy of Tesla

“The new Roadster has been delayed for several years. Then the launch of the new S model was delayed and the new S and X models focused only on interior design. This left the exterior largely unchanged, disappointing many potential buyers who wanted an updated exterior design after nearly 10 years of Model S, ”Langer pointed out.

Challenges in China

In China, consumers can choose from a large amount of foreign and domestic car makes and models. And although Tesla was once a trailblazer, the competition has now caught up or moved on. This fierce local competition comes from the Nio and Xiaopeng engines, said Arnold Ma, CEO and founder of the Qumin agency. “As battery swap technology becomes mainstream, Tesla simply cannot compete with the footprint of domestic companies’ battery stations. Nio, the national favorite in the luxury arena, uses battery swap – a strategy Tesla shunned.

Another problem is losing specific demographics. Porsche has a strong customer base in China that favors young people, women and tech-savvy. On the other hand, Tesla failed to connect with women. Some national car brands have started to attract young female drivers, such as Wuling. Among current users of its Hongguang MINI EV (ranked No. 1 in the Chinese new energy market for nine consecutive months), female car owners account for more than 60%. The company has now acquired a separate fan base, which is called the “Wuling Girls”.

These young women share videos of their pretty “pimped” cars and interact on social platforms like Douyin, Little Red Book and Kuaishou which have received over 100 million views and likes. Wuling has also worked with local businesses such as HeyTea and YOHO !, Pantone Universe and Chinese magazine Elle to boost sales to younger consumers as well.

The owners of Wuling share their cute personalized rides on social media. Photo: Little Red Book

While these consumers may not be Tesla, their demeanor offers insight into the often overlooked basics as well as the rise of consumers with “Guochao Pride.” Even the cult of billionaire provocative Elon Musk, the controversial tech entrepreneur CEO behind the company, cannot quench China’s desire for local names.

How Tesla can hang on to China

With C cars increasingly beneficial for the home, it will be essential for Tesla to continue to be the boldest company in design and disruption. Design innovation is needed because many Tesla fans have been influenced by the sleek Porsche Taycan – some believe the exterior styling is more exciting than the now outdated Model S design.

Localization is also necessary. Adjusting its product offering to local tastes in some practical ways, such as adding more comfortable and spacious rear seats, would show consumer understanding (American luxury car brand Cadillac did this in China for example) . But beyond these adjustments, the big picture lies in the “brand experience”.

“This is where Tesla needs to scale up significantly, especially in China,” Langer suggested. “Here, Nio is the benchmark for customer service and customer orientation. Tesla stores were initially disruptive, and Nio Houses took the experience to a different level.

Tesla also lacks a good social presence in China, which can be catastrophic for brands as good news and bad news can spread like wildfire across the mainland. Ma explained that compared to the West, social sentiment in China is centralized in “one time zone, one language, with over a billion users.” Therefore: “Without a local social strategy, it will be difficult to reverse negative feelings. As a peer recommendation, or guanxi culture, social success in China is also much more directly attributed to customer perceptions. “

Tesla’s public relations attitude also needs to be improved. The opinions of disgruntled netizens after the Shanghai Auto Show were met with less response. “Chinese consumers care about whether Tesla respects them and how they resolve issues, but the brand has mismanaged customer complaints about issues such as brake failure,” Ma continued.

Indeed, Ma suspects Tesla of being there to “inspire local businesses to accelerate its electric vehicle deployments and encourage consumers to adapt the new trend of electric vehicles, rather than a longer term solution or production brand. in China”. In which case, he thinks he will keep his references and his positioning in luxury.

Either way, what is vital is that Tesla be seen as a brand that offers consumers the future, whether they are flying or self-driving cars. It is still too early to write off Tesla: sales for a month cannot dictate a complete fall. But what is less ambiguous is that international labels must react to strong local opposition; making it an opportunity is vital. Langer concludes, “As the competition arrives, now is the time to excite customers even more than ever before. ”