China's 'zero Covid policy' forces Tesla's retail strategy overhaul, flagship showroom closed in Beijing

Elon Musk-led Tesla closed down its flagship showroom in China last week in an effort by the electric vehicle giant to adjust sales and service strategy amid ongoing Covid-related restrictions in the country. The showroom, Tesla’s first in China, was opened in 2013 and had been operational in Beijing’s Parkview Green, an upscale downtown shopping centre of Chinese capital.

“Their contract with us expired and Tesla decided not to extend it,” a member of the staff at Beijing's Parkview Green was quoted as saying by Reuters.

Across China, authorities are aimingto drive down the number of Covid-19 cases by imposing strict lockdowns, closing borders and imposing travel bans, a strategy codified by Beijing as 'zero Covid policy'. The policy, although deemed largely successful in keeping Covid spread under check in China, has hurt businesses due to movement-related restrictions.

Tesla had renovated the now-closed showroom in 2018 by expanding it further to occupy two floors of Parkview Greenmall. However, despite significant investments in renovation, the Texas-headquartered company decided not to extend its contract with Beijing’s Parkview Green that housed its showroom.

Earlier, reports had emerged stating that Tesla was considering the closure of some major showrooms in China due to descending footfall of people amid Covid-related restrictions in the country.

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Tesla also cut prices for its Model 3 and Model Y cars by up to 9 per cent in China. It further plans to focus on stores in less-expensive urban locations, supporting repairs, maintenance and servicing of its vehicles. So far, more than half of Tesla’s China stores do not offer repair or maintenance services.

Tesla owns and runs over 200 outlets across China, its second-largest market. The Electric Vehicle-major had sold 318,151 vehicles in China till September 2022, up 55 per cent as compared to the same period last year, according to China Passenger Car Association.

(With input from agencies)

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