September 25, 2022

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Tesla is reevaluating the way it sells electric cars in China, its second-largest market, and is considering closing some showrooms in flashy malls in cities like Beijing, where traffic collapsed during the Covid restrictions. People said with knowledge of the plans.

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He said the change would place a greater emphasis on stores in less expensive suburban locations that can also provide repairs as the company works to meet Elon Musk’s goal of improving service for existing customers, many of whom have long Complaint of delay.

As part of that push, Tesla is looking to accelerate recruitment of technicians and other employees for service jobs in China, one of the people said. Tesla’s China recruitment website showed more than 300 openings for service jobs as of Thursday.

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Musk said on Twitter last week in response to a Tesla owner in Texas who complained that he had been waiting over a month to get his vehicle fixed, that he “determined it to be a great way to advance Tesla service.” making” top priority.

Unlike mainstream automakers, Tesla owns all of its stores, rather than relying on dealers. It also sells its cars online. This has given it more leeway to accommodate the retail strategy that was initially modeled at Apple’s stores.

Tesla did not immediately respond to a request for comment.

According to the China Passenger Car Association, the US automaker sold 400,000 China-made Model 3 and Model Y cars in the first eight months of the year, 60% of which were sold locally. This was 67% higher than a year ago.

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One analyst said the change in Tesla’s approach to China, where it has become the second-largest EV brand after BYD, reflects a recognition that it now has to build customer loyalty, as it has built the world’s largest car market. has established its brand.

“Opening a showroom in an expensive shopping mall isn’t necessary, especially when the repair business has become lucrative,” said Yael Zhang, managing director of Shanghai-based consultancy Automotive Foresight.

“Better to keep only one or two showrooms downtown to maintain brand positioning, but move more into the suburbs.”

Tesla opened its first store in central Beijing in 2013 and now has more than 200 outlets nationwide that display models and arrange test drives for potential buyers.

However, more than half of the stores do not offer maintenance service because they are in high rented locations where space is limited. This includes Tesla’s first store in Beijing and its first store in Shanghai.

According to a Reuters count based on Tesla’s China website, more than half of Tesla’s showrooms in China’s seven biggest cities, including Shenzhen and Chengdu, are now in downtown areas.

Like other companies, Tesla has seen traffic in its stores disrupted by China’s tough approach to COVID-19, including lockdowns of varying scope and duration, including in Shanghai where it has a factory.

Reuters could not determine how many urban showrooms Tesla was considering closing, how many new locations could be opened in fast-growing suburbs, or what that change would cost.

The carmaker has been the target of a series of customer complaints and lawsuits in China, including a famous case last year in which an unhappy owner climbed up on a Tesla at the Shanghai Auto Show to handle its complaints about the company’s malfunctions. was opposed. ,

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The incident attracted significant attention in China and prompted state media outlets to criticize the company.

Tesla later apologized to Chinese consumers for not addressing complaints in a timely manner and pledged to review its service operations.

Tesla’s EV rivals in China have taken a mixed approach to retail delivery. In addition to self-run stores, BYD and Xpeng also rely on third-party dealers.

Like Tesla, Nio has a network of high profile urban stores in China. It has also invested in door-to-door service, sending workers to pick up cars for repairs and drop them off when work is done, many of whom were hired from the hotel industry.