According to two people with aware of the plans, Tesla is reexamining how it markets electric vehicles in China, its second-largest market, and may close some shops in glitzy malls in places like Beijing where traffic plummeted due to Covid restrictions.
As the business attempts to satisfy Elon Musk’s goal of improving service for current customers—many of whom have complained of long delays—the shift would place more focus on stores in less-expensive suburban sites that can also handle repairs, they said.
One of the persons added that as part of that effort, Tesla is aiming to increase recruiting of technicians and other workers for service jobs in China. As of Thursday, there were more than 300 service job positions listed on Tesla’s China employment website.
Musk stated last week on Twitter that he had made “advancing Tesla service to make it fantastic” a top priority in response to a Tesla owner in Texas who complained that he had been waiting a month to get his car mended.
Instead of relying on dealers, Tesla owns all of its retail locations, unlike traditional automakers. In addition, it offers online car sales. Because of this, it has had more freedom to modify a retail approach that was initially inspired by Apple’s retail locations.
An inquiry for comment was not immediately answered by Tesla.
In the first eight months of the year, the American manufacturer sold 400,000 Model 3 and Model Y vehicles built in China, with 60% of those sales occurring domestically, according to the China Passenger Car Association.
That was an increase of 67% over a year before.
The change in Tesla’s strategy in China, where it has overtaken BYD to become the second-biggest EV brand, would be an indication that the company is realising the need to cultivate customer loyalty now that its brand is well-established in the largest auto market in the world.
Yale Zhang, general director of Shanghai-based consultancy Automotive Foresight, stated that it is not required to open showrooms in pricey shopping malls, particularly if the repair sector has grown profitable.
To maintain the brand positioning while moving more showrooms to the suburbs, it makes more sense to preserve just one or two downtown.
Since opening its first location in central Beijing in 2013, Tesla has expanded to more than 200 locations throughout the nation, where customers can see models and schedule test drives.
However, because they are located in high-rent areas with limited space, more than half of the establishments do not provide maintenance services. That includes Tesla’s first stores in Beijing and Shanghai.
According to a Reuters count based on Tesla’s China website, more than half of the company’s showrooms are now located in downtown regions in seven of the country’s largest cities, including Shenzhen and Chengdu.
Like other businesses, Tesla has seen significant traffic disruptions in its stores as a result of China’s aggressive COVID-19 containment strategy, which has featured lockdowns of various sizes and lengths, notably in Shanghai where it has a factory.
Reuters was unable to ascertain the number of urban showrooms Tesla was considering closing, the potential number of new locations in rapidly expanding suburbs, or the financial impact of this change.
A number of consumer complaints and lawsuits have been filed against the automaker in China, including a well-known incident last year in which a disgruntled owner scaled the roof of a Tesla at the Shanghai auto show to protest the way the business handled her complaints about broken brakes.
China’s state media criticised the corporation after the episode garnered a lot of attention there.
Later, Tesla expressed regret to Chinese customers for not responding to the concerns promptly and promised to revise its service procedures.
Chinese EV competitors to Tesla have adopted a variety of retail distribution strategies. BYD and Xpeng rely on independent dealers in addition to their own retail locations.
Nio has a network of prestigious urban outlets in China, similar to Tesla. Additionally, it has made an investment in door-to-door service, sending out employees—many of whom were recruited from the hotel sector—to pick up automobiles for repairs and return them when the work is finished.