TSLA - China's EV Market: Many Losers No Big Winners

• Over 40 firms are currently selling passenger EVs in the Chinese market. Many will fail. There won't be a winner, only survivors.
• In the short run, sales are driven by subsidies. Those pull sales forward and make it easy to assume stronger demand than is warranted.
• There's a strong "new model" effect in China, and high seasonality. It's misleading to project on the basis of early sales.
• Though China is a huge market, EV sales are mostly in a handful of big cities. There is a big exception: the A00 "microcar" segment led by GM's Wuling Hongguang.
• New entrants, including Tesla, are limited by having vehicles only in 1-2 niches. Broad product portfolios leave incumbent OEMs, including BYD, best positioned to expand.

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