New Energy Vehicle Channel Transformation: Direct Sales "Cooling Off" and Diversified Operations

Invest in stocks with Golden Kylin Analyst Reports—authoritative, professional, timely, comprehensive—helping you uncover potential thematic opportunities!

(Source: Securities Times)

The left picture shows Xiaomi Auto employees live streaming to sell cars, the right picture shows Aeva Shanghai Experience Center. Photo by Mei Shuang

Securities Times Reporter Mei Shuang

From once being regarded as a benchmark for industry innovation with the direct sales model dominating, to now proactively adjusting and returning to a diversified channel layout, the retail ecosystem of new energy vehicles is undergoing a profound transformation.

In the past, new energy vehicle brands clustered in city core commercial districts, with showrooms in shopping malls becoming industry standard and traffic landmarks. Recently, Securities Times reporters visited and found that the lively car experience zones are now frequently “changing faces,” with brands updating at a faster pace.

Interviewees believe that as the industry shifts from incremental expansion to stock competition, some new energy vehicle brands prefer to proactively shut down inefficient direct sales stores and shift toward agency, franchise, and authorized dealer models. Moving away from a single direct operation model, new energy vehicle brands are adopting a “core city direct sales + diversified dealer networks in sinking markets” operational pattern. Additionally, the convenience of online car purchasing has prompted more brands to seek change, with online channels and offline experiences gradually integrating deeply.

Direct sales model gradually receding

“Where there are shopping malls, there are new energy showrooms.” For a period, new energy vehicle stores almost became a standard feature in first-tier city malls. From core commercial districts to community shopping areas, showrooms sprouted everywhere. This dense, all-encompassing channel layout was a means of brand image display and a hallmark of the industry’s rapid expansion.

“Direct sales models, with their nationwide uniform pricing, standardized services, and direct communication with users, can quickly capture consumer minds and establish a new brand perception,” automotive industry analyst Gu Qiuming told reporters. In the early stages of new energy vehicle development, the transparency and predictability of direct sales helped automakers quickly establish a tech-savvy, high-end, youthful brand image. Meanwhile, direct stores allowed automakers to efficiently reach users, collect first-hand data, and operate across the user lifecycle—highly aligned with the connected development of new energy vehicles.

However, during recent visits to a certain Shanghai new energy vehicle district, reporters found that some top brands’ showrooms, once occupying prime mall locations, are quietly shrinking. “After the store lease expires, they might not consider renewing,” a sales consultant for a new force brand told reporters. High operating costs are now the biggest challenge facing these stores.

A staff member at a new energy vehicle store estimated that a 200-square-meter direct sales showroom in a first-tier city core district costs over 2 million yuan annually in rent, plus wages for 15–20 employees, utilities, property fees, and marketing expenses, with total annual operating costs generally exceeding 4 million yuan.

“Compared to peak customer flow in the past, stores now mainly serve as display spaces,” said He Yufeng, head of a Shanghai Pudong new energy vehicle store. “Consumers’ understanding of new energy vehicles has become quite mature, so they no longer rely heavily on dense mall stores for market education. Car companies also no longer need large-scale stores to prove their brand strength. Plus, rent in core commercial districts is high, and store efficiency is declining. In broader sinking markets, direct outlets find it hard to achieve low costs and wide coverage, which clearly restricts expansion speed and profitability.”

“Over the past one or two years, we’ve closed some mall stores. The costs of new store renovations have been greatly reduced. Partly because of high rent, and partly because of decreased foot traffic and lower conversion rates—fewer customers test-driving and buying at stores than before,” He Yufeng explained. “In the past, stores would ask customers if they wanted to join owner clubs or activities, but now all these ‘flashy’ activities have been canceled. The car viewing process has reverted to direct inquiries and configuration discussions.”

Proactively adjusting channel strategies

Moving from a single direct sales model to a “direct + franchise, authorized” model also confirms automakers’ proactive change. The asset-heavy nature of direct sales makes rapid coverage of lower-tier cities difficult, while franchise models can expand quickly through “light assets,” capturing sinking market share.

Notably, some OEMs are also experimenting with reforms. For example, Xpeng Motors previously launched the “Jupiter Plan,” converting some direct stores into dealer models. Xiaomi Auto is exploring an “1+N” model—“1” representing Xiaomi Auto’s self-operated delivery centers focused on delivery, sales, and after-sales services, and “N” representing agent sales and user service touchpoints. Some new force brands are also implementing direct + dealer/city partner models.

Tesla, a pioneer in direct sales, continues to optimize its channel structure. It is reported that in first- and second-tier cities, Tesla mainly relies on direct experience stores and Tesla Centers, while in more sinking markets, the company recruits authorized body shops and paint centers. Recently, Tesla has further lowered authorization thresholds, using a “light assets” approach to strengthen its after-sales network.

The hybrid “direct + franchise/authorized” channel model has become a pragmatic, balanced choice for current new energy vehicle companies. Gu Qiuming believes that direct sales can maintain brand image, unified service standards, and control user experience in core city districts; meanwhile, franchise and authorized channels leverage local dealer resources, capital strength, and mature networks to rapidly sink into third- and fourth-tier cities and county markets, significantly reducing store opening costs and operational pressures, and improving channel coverage efficiency.

“This dual-track model preserves the advantages of direct sales in price transparency, data connectivity, and service standardization, while also leveraging the expansion speed, cost control, and regional deepening strengths of traditional dealerships,” he said. However, some industry insiders point out that agency and authorized models are not foolproof. For example, after opening franchise and authorized channels, service levels and staff quality among dealers can vary, leading to inconsistent standards, declining user experience, and even issues like unfulfilled promises, irregular deliveries, and slow after-sales responses—directly impacting brand reputation.

“Pure direct sales may not be sustainable long-term, and ‘direct + dealer’ models can also produce conflicts between channels. Which approach is better may require more experimentation and exploration,” said an internal source from a new force brand.

Deep integration of online and offline channels

Against the backdrop of ongoing channel reforms, deep integration of online and offline channels has become a trend in new energy vehicle sales.

Today, more and more automakers are using official apps, mini-programs, live streaming, and other digital tools to realize the entire process of viewing cars, consulting, ordering, payment, and production online, greatly improving purchasing efficiency and price transparency. Offline stores are shifting from traditional sales venues to experience, test drive, delivery, and service touchpoints, serving as the core for brand display, user interaction, and localized services.

During visits, reporters noticed that beyond offline customer flow, “live streaming sales” are becoming increasingly common. Sales staff use their phones to explain models, demonstrate features, and answer online user inquiries, transforming stores from simple offline experience spaces into real-time “offline display + online traffic” sales platforms.

“Originally, malls focused on experience and test drives, but now they actively use live streaming to expand their reach, acquire leads at lower costs, and improve efficiency. This change reflects higher demands for store productivity from automakers and also shows that, amid channel contraction and cost pressures, brands are using lighter, digital methods to revitalize offline channel value,” Gu Qiuming said. He believes that deep integration of online and offline channels is an inevitable path for new energy vehicle sales.

In response, some industry experts suggest that, facing this trend of deep online-offline integration, automakers should accelerate building an integrated channel system with a unified online hub and diverse offline touchpoints. On one hand, strengthen official apps, mini-programs, live streaming, and other online platforms, unify orders, pricing, financing, and after-sales policies, and enable full user data connectivity to make online the core entry point for transactions, services, and user operations; on the other hand, streamline offline store functions, focusing on experience, test drives, delivery, and services, reducing low-efficiency malls, and optimizing channel structures.

“Automakers should also enhance digital management capabilities, break down data barriers between online and offline, unify service standards and assessment systems, and avoid conflicts between channels. By improving efficiency online, enhancing experience offline, and achieving multi-channel diversity, unified management, consistent services, and direct user access, they can maintain competitiveness and sustainable development amid channel transformation,” Gu Qiuming concluded.