Investing.com - In a fiercely competitive automotive market, Tesla Inc (NASDAQ:TSLA) is expected to achieve another record-breaking sales quarter in China despite facing increasing competition from local rival brands like BYD (SZ:002594). The U.S. automaker is projected to sell approximately 155,000 vehicles between April and June, marking a growth of about 13% compared to its first-quarter performance.
However, this sales surge does not necessarily translate into an increased market share for Tesla within the Chinese electric vehicle (EV) sector. Instead, it seems that competitors BYD and Aion - Guangzhou Automobile Group's EV brand - are gaining ground at Tesla's expense. As per current predictions, there may be a decrease in Tesla’s market share from 16% down to around 13.7%.
Internationally renowned Deutsche Bank (ETR:DBKGn) has estimated similar figures for Tesla’s second-quarter performance in China with a slight difference – forecasting sales of approximately 153,000 units while predicting global sales reaching nearly half a million units.
To sustain growth momentum amidst intense competition and rising costs associated with direct-sales model expansion into smaller cities across China, managing director Yale Zhang of Shanghai-based consultancy Automotive Foresight suggests that Tesla must consider expanding its network strategically into these regions.
However, he emphasizes how well-positioned BYD already is within these markets due to their existing dealership networks which give them an edge over companies like Tesla who rely heavily on direct-sale models.
While we await an official confirmation regarding global and Chinese-specific sales numbers from various sources including association data set for release in early July; one thing remains clear: Despite being home to its largest factory and serving as the company's second-largest consumer base after North America; China continues presenting both ever-growing opportunities as well as challenges for companies like Tesla.
Earlier this year saw price cuts implemented by the company on two older model cars aimed at boosting flagging sale rates resulting in an industry-wide price war against competitors such as BYD who have responded by offering discounts or introducing lower-priced new models themselves.
Interestingly enough though where smaller EV manufacturers such as Nio & Xpeng (NYSE:XPEV) have found difficulty maintaining steady sale rates during recent months amid declining overall domestic demand; competitor BYD seems unaffected continuing instead to expand upon their lead positioning through offering competitively priced vehicles under USD 41k approx (300k yuan).
Furthermore, evidence suggests that globally too they're catching up fast outperforming even giants like 'Tesla' overseas markets including Singapore where they've outsold them during the January-May period this year while also seeing success in Australia specifically with their Atto3 model outpacing Model3 unit sales last month.