Tesla to hit record quarterly sales in China even as market share shrinks, analysts say

Visitors check a Tesla Model 3 car next to a Model Y displayed at a showroom of the U.S. electric vehicle maker in Beijing, China February 4, 2023. REUTERS/Florence Lo/File Photois set to hit another record quarter with its China sales while it faces mounting pressure from local competitors such as BYD eating into its share in the world's largest auto market, analysts say.

The U.S. automaker could sell 155,000 cars in China during April to June, an increase of 13% from its record first quarter, according to estimations by Shi Ji, an analyst with China Merchants Bank International Securities. However, Tesla's share in China's battery electric car market would shrink in the quarter to 13.7% from 16% in the first three months, while BYD and Aion, the EV band of Guangzhou Automobile GroupDeutsche Bank predicted Tesla's China sales to hit 153,000 units in the second quarter, while globally it could sell 448,000 units in total.

"Tesla has to sell into China's lower tiered cities to seek further growth, but its direct sales model would be too costly to expand its sales network into hundreds of such cities," said Yale Zhang, managing director at Shanghai-based consultancy Automotive Foresight.Tesla will announce global sales numbers over the weekend, while China sales will be available from association data in the first week of July.

China is Tesla's second largest market after North America and home to its biggest factory. It slashed prices for its two ageing models at the beginning of the year to boost sales and started a price war with competitors including BYD following to offer discounts or launch new lower priced models.

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