Tesla, an electric vehicle company founded in California in 2003, has been attracting a lot of attention worldwide. Tesla focuses not only on producing luxury electric vehicles—it prides itself on being a high-tech brand known for its innovation and creativity.
In and attempt to penetrate the Chinese market, Tesla unveiled its model S in 2013. Tesla initially expected Chinese consumers’ interest would be high and ambitious sales forecasts. However, Tesla’s entry into China has been far less successful than expected.
To investigate why Tesla is struggling in China we conducted a series of research. A brief introduction on Tesla’s background focusing on the current situation in the luxury car industry as well as pertinent policies provides necessary context to understand Tesla’s situation. Based on both the background information and current industry situation, a SWOT analysis of Tesla is completed to gain a more comprehensive understanding of the company. We then focus on market issues and try to understand why and how these issues are affecting Tesla. Current strategy is analyzed and we conclude with several strategic recommendations for Tesla.
Electric vehicles are not a new concept for Chinese policy makers. Since 2001, electric vehicles have been implemented into China’s Five-Year Plans. Additionally, electric vehicles (EVs) were categorized as a “strategic emerging industry” in 2010. In order to push the emerging industry, the Chinese government introduced many supporting policies encouraging consumers to purchase EVs. For instance, Four central ministries released a plan promoting EV use between 2013 and 2015. The plan provided a national subsidy of RMB 35,000-60,000 for customers who purchased EVs.
The second way officials chose to stimulate EV purchase was tax exemptions. In September 2014, China’s State Council removed the 10 percent purchase tax on domestic-made EVs. However, because Tesla is made in the U.S., customers who
Cited: Baer, D. (2015, January 15). 5 reasons why Tesla is struggling in China. Business Insider. Retrieved from http://www.businessinsider.com/5-explanations-for-why-tesla-is-struggling-in-china-2015-1 Dana Hull Henry, X. (2014, April). ?PingWest???Tesla?????? | PingWest??. Retrieved from http://www.pingwest.com/the-chaos-of-tesla-china/ Kuo, L Li, J. (2015, February 17). Why Tesla continues to flop in China. Retrieved from http://www.forbes.com/sites/junhli/2015/02/17/why-tesla-continues-to-flop-in-china/ Nick Marro, Hengrui Liu, & Yu Yan Robinson, L. (2009, January 1). A summary of Diffusion of Innovations. Retrieved from http://www.enablingchange.com.au/Summary_Diffusion_Theory.pdf