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The policies aimed at replacing gas guzzlers with electric vehicles have helped. In cities like Shanghai and Beijing, car owners can trade in older cars for a new one and get a nearly $2,100 subsidy. In some Tesla dealerships, employees have created a wall with photos of the cars that buyers have traded in — they range from Porsches to Mercedeses and even the occasional Chinese car.
But trading in an old car for a new one is usually a one-time thing.
For many dealers, it is getting harder to sell any car. “It was OK two years ago, but now the market is saturated,” said Chen Jiaming, a salesperson at an FAW-Volkswagen dealership in Shanghai, a collaboration of the Volkswagen Group with the state-owned FAW Group.
Mr. Chen works out of the “New Energy Vehicle Block,” in the basement of a mall near Shanghai’s Zhongshan Park that was converted from a food court three years ago when electric vehicles first took off in China.
Some of the one dozen dealerships in the basement of the mall have already left, the lights inside were turned off on a recent weekday. A row of claw machines lit up another empty space. In order to keep the FAW-VW dealership from closing, the mall gave it seven months of free rent, Mr. Chen said.
“I think Tesla’s competitiveness in China will only last for the next two or three years at most,” said Mr. Chen, who owns a BYD. Tesla’s driving technology is no longer cutting edge compared with local rivals, he added.
