The China Passenger Car Association has revealed that Chinese startup Li Auto outsold Tesla in its local market last month. While Tesla sells fully electric cars in China, limiting itself to consumers who are only interested in electric cars, Li Auto sells hybrid SUVs equipped with a fuel tank to charge the battery.
This likely contributed to the startup selling a record 40,422 vehicles last month, far more than the 28,626 battery electric cars (BEVs) sold in October. Range anxiety is a major barrier to electric vehicle adoption in most EV markets, even in China, which has the widest network of public charging stations (almost 1.8 million as of 2022). Equipping its electric cars with a fuel tank for additional power likely alleviated some consumers’ concerns about range.
Li Auto projects similar vehicle sales numbers through the fourth quarter this year, forecasting around 41,700 to 42,600 vehicles per month. The startup said that it plans to begin selling its first-ever battery electric vehicle (BEV), the MEGA multipurpose vehicle in February 2024 followed by the launch of three more battery-only electric vehicles in the second half of 2024.
The startup far outsold Tesla in October despite offering higher purchase prices than both the Model Y and Model 3. Tesla has been engaged in a fierce discount battle in the increasingly competitive Chinese market, but it seems customers are still flocking to local automakers despite relatively higher prices.
However, it is still unclear whether Li Auto’s high October sales numbers were merely a fluke or whether the startup will continue to outsell Tesla in the Chinese market. Data from the China Passenger Car Association shows that the Beijing, China-based startup sold 36,060 cars in September while Tesla sold 43,507 vehicles.
China is without a doubt the world’s largest electric vehicle market and contributes to around one-fifth of Tesla’s total sales. Tesla reported its first dip in earnings and revenue since Q3 2019 in October amid poor global economic conditions and high interest rates that CEO Elon Musk said would impact the company’s market base.
Increased competition from Chinese vehicle startups and automakers with millions of dollars in government funding has also pushed Tesla into a corner in its largest market and forced it to consistently slash prices to remain competitive. In the meantime, Li Auto is planning on more than doubling the size of its research and development team to fast-track the development of autonomous driving technology.
As the competition for market share heats up, manufacturers such as Rivian Automotive Inc. (NASDAQ: RIVN) will have to keep improving their offerings in order to corner a bigger segment of the market for themselves.
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