Tesla Shuts First Showroom in China Due to High Costs
Tesla has closed its first flagship showroom in China, located in Beijing’s upscale Parkview Green shopping mall, in an apparent bid to adjust its sales and services strategy in the country, Reuters reported on November 2. When Chinese media outlets attempted to contact the showroom, the call was transferred to a nearby smaller showroom. Tesla sales staff said that the Parkview Green location was shut down the week before last due to its high rent.
Regarding a “strategic adjustment” reported by Reuters, a staff member suggested that it may just be slander originating from the firm’s competitors, adding that Tesla vehicles are selling well in Beijing.
Parkview Green is located in the capital city’s Chaoyang District, with a total area of 200,000 square meters. It is a glossy modern building integrating green office buildings, shopping centers, art facilities, and boutique hotels. Elon Musk, the founder of Tesla, previously stayed at its Hotel Éclat Beijing.
Tesla’s Parkview Green showroom was opened in 2013, when the firm pursued a local sales mode integrating online ordering and offline experiences. Since then, this approach spread rapidly in China, triggering other brands to follow. The store was renovated and expanded in 2018. That year, Tesla’s sales increased by about 2.5 times to 250,000 vehicles.
When the showroom reopened, Tom Zhu, the president of Tesla China, emphasized the significance of the Chinese market. “Since Tesla entered the Chinese market in 2013, we have set up more than 30 experience centers within five years,” he said.
Zhu once summed up the main four functions of the store: conveying the concept of sustainable energy; showing the composition of Tesla’s electric vehicles; comparing the cost of vehicles and enjoying transparent and standard services; and driving the Model X and Model S.
After the closure of the Parkview Green showroom, Tesla’s official Chinese website shows that there are currently 17 experience stores in Beijing. In September, Reuters reported that Tesla is reassessing its sales methods in the Chinese market, considering closing some showrooms in Beijing’s shopping centers and paying more attention to suburban stores with lower costs and maintenance services. At that time, Tesla responded that its sales channels in China were progressing at a normal pace of expansion.
In 2021, Tesla relocated its US stores in expensive business districts to more remote areas with lower rent, and established centers with multiple functions such as vehicle display, sales and after-sales services.
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According to its financial report for the third quarter of 2022, Tesla’s revenue in the period reached $21.454 billion, up 56% year-on-year, while its delivery reached more than 343,000 vehicles. On October 24, Tesla lowered the prices of its Model 3 and Model Y in China, ranging from 14,000 yuan to 37,000 yuan ($1,915 to $5,062). Among them, the price of the long-range version Model Y dropped by nearly 10%, with the sudden move triggering a users’ rights protection campaign.
