Tesla Said To Be Changing Retail-Sale Model In China And Reduce Reliance On Expensive Malls

Tesla Inc TSLA is trying out a new sales model in China and shifting dealer outlets away from expensive malls to more traditional auto shopping neighborhoods, cnEVpost reported on Tuesday, citing YiCai.com. 

Tesla reportedly plans to build traditional 4S store-style outlets in traditional auto shopping districts to boost vehicle display and after-sales service capabilities.

What Are 4S Stores? A typical 4S store — short for sales, service, spare parts and surveys — offers a full-service approach and is a one-stop shop for all customer needs from buying a car to after-sales and feedback as well.

See Also: Nio Opens Its 25th 'Nio House' Experience Center In Jiaxing City

Tesla is said to be scouting for locations near traditional auto shopping districts, which will have these 4S capabilities with showrooms and experience centers in the front and also double up as sites for after-sales, repair and workshop. 

Why The Shift? The Elon Musk-led company follows a direct sales and service model where it owns the stores instead of having franchisees and customers place the order online. The company is reportedly bringing in changes to pay lower rents and expand its after-sales capability as sales increase significantly.

Last year alone, Tesla’s China sales doubled on a year-on-year basis to $6.6 billion and represented 21.1% of its total revenue of $31.54 billion.

Tesla faces stiff competition in China where homegrown electric players such as Nio Inc NIO, Xpeng Inc XPEV, Li Auto LI and BYD Co BYDDF are quickly ramping up offerings and eyeing overseas expansion as well.

Key rival Nio recently opened its twenty-fifth NIO House in China’s Jiaxing City. Nio House is the electric automaker's experience center that also doubles up as a point of sales. The ramp-up comes ahead of Nio’s Norway debut later this year where it plans to build its own sales and service networks.

Price Action: Tesla shares closed 3.27% higher at $709.67 on Monday.

Click here to check out Benzinga's EV Hub for the latest electric vehicles news.