Electric vehicle market changing as Tesla slumps and Xiaomi enters

Electric vehicles are in a state of brand flux as market leaders wane while those from non-endemic categories spot a chance to enter the world of modern automotives. 

Why electric vehicles matter

The automotive industry has to change: not only are fossil fuels running out, the planet is warming and governments are banning combustion engines (or at least say they will). Electric vehicles are their next greatest hope. 

It’s a complicated time for the industry, however, as inflation has bitten into manufacturing costs while in China, a one-time mega-growth market, the picture for big-ticket items is less than rosy.

Tesla consideration shrinks

As would-be buyers consider other options, Tesla’s sales (measured in deliveries) slumped 9% year-on-year in Q1 2024, its first decline in four years even with price cuts. It’s worth noting that Chinese manufacturer BYD also saw steep declines despite price cuts.

Some of Tesla’s troubles are ascribed to its increasingly controversial chief executive, Elon Musk. "It's very likely that Musk himself is contributing to the reputational downfall," Shahar Silbershatz, CEO of reputation consultancy Caliber, told Reuters. 

Xiaomi enters

Into this melee comes the major Chinese smartphone and appliance maker Xiaomi, which announced its first EV last week, in an event that drew specific comparisons with Tesla, not least the price. 

"In the three years of developing this car, my biggest realization is that making cars is extremely difficult,” said founder and CEO Lei Jun. "So, today, every person who is still persevering in making cars is a hero of our time.”

Electric vehicles in context

It’s not just the engine that’s different from a conventional car; an electric vehicle is a computing and software gamble that has proved to be radically different from the capabilities of traditional automotive manufacturers. 

In addition, “the early adopters have adopted,” explained Tim Stafford, MD of Imagination Detroit, in a WARC exclusive from last autumn. 

“Now, it’s time to engage with the ‘early majority’ customer, who has to decide which vehicle is right for them.” The branding challenge is on. 

Sourced from Reuters, WARC