Tesla's China Challenge: Diminishing Market Share And The Grok AI Wild Card

Author: Surbhi Jain | November 13, 2023 01:46pm

Elon Musk‘s Tesla Inc (NASDAQ:TSLA) has been losing EV market share in China. October 2023 deliveries data showed that its China-made EVs were down 2.6% from September.

On the other hand, it’s Chinese rival BYD Co Ltd‘s (OTCPK:BYDDF) sales were up 5% In October vs. September.

Related: Tesla China Sales Lag Warren Buffett-Backed Rival By 44% In October: Analyst Says There’s Something To Cheer About Anyway

In China, Tesla has been prioritizing sales over profits, in the face of stiff competition. Aggressive discounts have impacted margins.

Recently, factory upgrades for a revamped version of the Model 3 impacted deliveries. As a result, Tesla’s share of China’s EV market is now 9.89% as of Q3 (down from 12.98% in Q2). With the production curbs behind the company, the revamped and re-priced Tesla Model 3 has begun deliveries starting Oct. 26.

The CAAM report on the key auto trends in the Chinese market in Q3 of 2023 highlighted that the sector’s focus now appears to be on applications in the fields of AI large-scale language models and smart cockpits.

Domestic players such as GAC, Chery, iFLYTEK, Great Wall Motors are already working on AI large-scale language model platform and smart voice interaction models that can be integrated with a smart cockpit.

The report also shed light on non-Chinese OEMs strengthening R&D in the area.

• XPeng, FAW, and SAIC are partnering with Volkswagen AG (OTCPK:VLKAF) to jointly develop new EVs.
• Bayerische Motoren Werke AG (OTCPK:BMWYY) has opened a new R&D center in Shanghai, China.
• Toyota Motor Corp (NYSE:TM) is further strengthening local development of intelligent and electrification technologies, including a name change of its China unit to Intelligent ElectroMobility R&D Center by TOYOTA (China) Co., Ltd. (IEM by TOYOTA).
• General Motors Co (NYSE:GM) is also looking at local experts for technical development of vehicle software.

As announced on X (formerly Twitter) the first product of Musk’s most recent artificial intelligence endeavor, xAI, is called Grok. It is meant to compete with products like Google’s Bard and OpenAI’s ChatGPT.

Per an Electrek report, early beta tester Brian Roemmele disclosed that a "smaller quantized" variant of Grõk will operate "native" in Tesla vehicles, utilizing the vehicles’ onboard computing capabilities.

Musk responded to Roemmele’s post, saying, “Provided our vehicle AI computer is able to run the model, Tesla will probably have the most amount of true usable inference compute on Earth. “

Provided our vehicle AI computer is able to run the model, Tesla will probably have the most amount of true usable inference compute on Earth.

Even in a robotaxi future, the cars will only be used for ~1/3 of hours/week, leaving 2/3 for distributed inference, like SETI.

— Elon Musk (@elonmusk) November 4, 2023

While there is no official timeline for the integration into Tesla vehicles, indications suggest that Grok AI could indeed be a component of the strategy, a move that might enhance the company’s involvement in China’s swiftly evolving automotive market.

Read Next: Tesla Analyst Draws Parallel Between Model 2 And Apple’s iPhone: ‘Game Changer That….. Will Crush ICE Viability’

Photo: Shutterstock

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