Home News Tesla Model 3 is winning over China’s growing middle class

Tesla Model 3 is winning over China’s growing middle class

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Tesla Model 3 is winning over China’s growing middle class

The success of this Tesla Model 3 with China’s growing middle class is assisting the company market its business in the country’s competitive automotive landscape and the world’s vehicle market. 

As a result of China’s economic growth in recent decades, the country has seen the emergence of a middle class that was growing. Pew Research estimates that between 2011 and 2001 more than 203 million people crossed the threshold to the middle class in China. By 2015, Credit Suisse concluded that China had overtaken the US as the country with the middle class. The Global Business Policy Council further noted that by 2025, estimates point to private consumption in China being the largest contributor to the country’s economic growth.

Much like the United States’ middle class and the concept of “keeping up with the Joneses,” China’s middle class appear to be motivated by the concept of “keeping up with the Wangs. ” As such, purchases that improve one’s social image, such as premium gadgets and clothing, have become commonplace. This is the demographic that Tesla can perfectly capture with the Model 3, as it is a vehicle that provides premium electrical mobility at a price point far more attainable than the company’s previous offerings, the Model S and X, which have become popular status symbols for the wealthy.

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Presently, the Model 3 begins in 433,000 yuan (around $64,000) in China, and Tesla has even started offering free Autopilot as a limited time offer. These strategies will likely attract the attention of middle class buyers in the country, at least until Gigafactory 3 comes to life. If Elon Musk’s estimates prove accurate, Tesla can start making cheap variants of this Model 3 in China, which will be more attainable to consumers.

Aside from the Model 3 being Tesla’s most affordable vehicle in China today, other aspects that appear to be helping the electrical sedan include the country’s growing middle class and the nation’s open support for electrical vehicles. China has adopted a stance towards electric cars, and it’s becoming evident in the country’s sales.

By way of example, in 2018, electric vehicle sales in China rose 83% year-on-year, allowing the country to push over 1 million EVs within the year. These figures become even more notable considering that overall light-duty vehicle sales in the country actually declined by 2.76percent in 2018, as noted by the China Association of Automobile Manufacturers (CAAM).

Neighborhood news reports note that Tesla sales sank 15.4% year-over-year in 2018 as the Model S sedan and Model X SUV were weighed down by steep tariffs resulting from the trade war between the United States and China. Bearing this in mind, the immense interest being generated by the Model 3 among the country’s car buyers has been a very pleasant surprise.

It is undeniable that Tesla’s business in China has seen its ups and downs over the years. Despite challenges such as the initial issues with Model S deliveries in the past to the impacts of the recent US-China trade war, the company’s electric cars have kept their place among the ultimate status symbols for consumers. Together with the Model 3 about ready to saturate China, Tesla can tap into what could be a very lucrative market.

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