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

The left image shows Xiaomi Auto employees livestreaming to sell cars, and the right image shows an experience center in Shanghai for AVATR. Mei Shuang/Photo

Securities Times reporter Mei Shuang

From a direct-sales model that was once hailed as the benchmark for innovation and dominated the industry, to today’s proactive adjustments and a return to a diversified channel layout, the retail ecosystem in the new energy vehicle industry is undergoing a profound transformation.

In the past, new energy vehicle brands crowded into the core business districts of cities, and car-supermarket showrooms became the industry standard and traffic landmarks. Securities Times reporter recently visited and found that the once bustling car experience areas are now frequently “changing faces,” with brands swapping faster.

Interviewees believe that as the industry moves from increment-driven expansion into a stock-competition phase, some new energy vehicle brands tend to proactively shut down low-efficiency direct stores and switch to agency, franchise, and authorized dealership models. By saying goodbye to a one-size-fits-all operating mode, new energy vehicle brands are moving toward an operating pattern of “direct operation in core cities plus diversified dealership in lower-tier markets.” In addition, the convenience of purchasing online has also led more brands to actively seek change, with online channels and offline experiences gradually integrating at a deeper level.

Direct operation model gradually ebbs

“Wherever there’s a shopping mall, there’s a new energy showroom.” For a time, new energy vehicle stores almost became a standard feature in first-tier city malls. From core business districts to community commerce, car showrooms sprang up everywhere. This high-density, full-coverage channel layout was a way for brands to present their image, and it was also a vivid footnote to the rapid expansion period of the new energy vehicle industry.

“The direct-sales model, with its nationwide uniform pricing, standardized service requirements, and direct communication with users, can quickly capture consumers’ minds and establish a new brand’s recognition.” Gu Qiuming, an analyst in the auto industry, told the reporter. In the early stages of new energy vehicle development, the transparency and predictability of the direct-sales model helped automakers quickly build brand images of being technological, high-end, and youthful. At the same time, automakers could efficiently reach users through direct stores, collect first-hand data, and achieve whole lifecycle user operations—highly aligned with the direction of connected development in the new energy vehicle industry.

However, during a recent visit to a new energy vehicle street in Shanghai, the reporter found that some flagship brand showrooms that once occupied prime mall locations are quietly shrinking. “After the store lease term ends, they might not consider renewing.” A sales consultant from a new force brand told the reporter that high operating costs are currently the biggest problem facing these stores.

Some people at staff level in new energy vehicle stores have done the math. A new energy direct showroom of 200 square meters located in a core business district of a first-tier city has annual rent of around more than 2 million yuan, and in addition to salaries for 15 to 20 employees, water and electricity, property management, and marketing expenses, total annual operating costs generally reach over 4 million yuan.

“Compared with the past peak periods of foot traffic, now the stores are mostly for display.” He Yufeng, head of the Pudong store of a new energy vehicle brand in Shanghai, told the reporter. Consumers’ understanding of new energy vehicles has become relatively mature, and they no longer need to rely so urgently on high-density mall stores for market education. Automakers also no longer need big stores to prove their brand strength. In addition, high rents in core business districts of first-tier cities and declining single-store efficiency constrain expansion speed and profitability. In broader lower-tier markets, however, it’s also difficult for direct-operated outlets to achieve low-cost, broad coverage.

“This past couple of years, we cut some mall stores. We also saved a lot on the renovation costs for the new stores. Part of the reason is high rent, and part of the reason is reduced foot traffic and a lower conversion rate from visitors to customers. Compared with before, there are fewer customers who test drive and close deals through the stores.” He Yufeng said. Previously, store sales would consult customers about whether to participate in owner events. Now all these “flashy but impractical” things have been canceled, and the viewing process has returned to direct inquiries and discussing configurations.

Proactively adjusting channel strategy

Moving from a single direct-sales model to a “direct + franchise/authorization” model also reflects automakers’ proactive drive to adapt. The direct-sales model’s heavy-asset nature makes it difficult to quickly cover lower-tier cities, while franchise models can expand quickly and capture lower-tier market share by leveraging “light assets.”

What’s worth noting is that some OEMs have also begun to try transformation. For example, XPeng Motors previously launched the “Jupiter Plan,” converting some direct stores into dealer models. Xiaomi Auto is exploring a “1+N” model, where “1” represents Xiaomi Auto’s self-built and self-operated delivery center, whose primary function is delivery and which covers “sales and after-sales service” businesses. “N” represents agent sales and user service touchpoints. In addition, some new force brands have landed a direct + dealership/city partner model.

Tesla, the vanguard of the direct-sales model, is also continuously optimizing its channel structure. According to information, in first- and second-tier cities, Tesla still mainly relies on direct experience stores and Tesla Centers, while in more lower-tier markets, the company recruits authorized body-and-paint and service centers. In recent years, Tesla has further lowered the authorization threshold to fill out its after-sales service network in a “light-asset” way.

Using a hybrid channel model of “direct + franchise/authorization” has become a pragmatic and balanced choice for new energy vehicle companies. Gu Qiuming believes that the direct-sales model can maintain brand image in core business districts of first-tier cities, keep unified service standards, and control the user experience—safeguarding the brand’s tone and identity. Meanwhile, franchise and authorization channels can leverage local dealers’ resources, financial strength, and mature networks to quickly expand into third- and fourth-tier cities and county-level markets, greatly reducing automakers’ store opening costs and operational pressure, and improving channel coverage efficiency.

“This dual-track model preserves the direct-sales advantages in transparent pricing, direct data connectivity, and standardized services, while also leveraging traditional dealerships’ strengths in expansion speed, cost control, and deep regional cultivation.” However, some industry insiders point out that agency and authorization models are also not a one-time fix. For example, after opening up franchise and authorization, dealer service quality and personnel qualifications can vary widely, making it easy to run into issues such as inconsistent service standards and a decline in user experience, and even problems like private commitments, non-standard deliveries, and slow after-sales responses—directly affecting brand reputation.

“A pure direct-sales model may not last forever, and a ‘direct + agency’ model also can’t guarantee that the two channel types won’t conflict. Which approach is better may still require more attempts and exploration.” said an insider at a new force brand.

Online and offline integration at a deeper level

Against the backdrop of continuously deepening channel change, the deep integration of online and offline has become a sales trend in the new energy vehicle market.

Now, more and more automakers use digital tools such as official apps, mini programs, and livestreaming to make the entire workflow online—browsing cars, consulting, placing orders, paying, and scheduling production—greatly improving purchase efficiency and price transparency. Offline stores, meanwhile, are shifting from traditional sales venues to physical touchpoints for experience, test drives, delivery, and service, taking on core functions such as brand display, user interaction, and localized service.

During its visits, the reporter noticed that besides offline foot traffic at new energy vehicle stores, “livestreaming to sell cars” is becoming increasingly common. Store salespeople speak to smartphone camera lenses, explain vehicle models, demonstrate features, and answer online users’ questions. Stores are transforming from purely offline experience spaces into real-time sales platforms that combine “offline showcase + online lead generation.”

“Previously, commercial stores and supermarkets focused mainly on experience and test drives; they are now proactively using livestreaming to broaden the boundaries of reaching users, obtaining leads at lower cost and improving efficiency. This change reflects not only higher requirements automakers have for store productivity per square meter, but also that amid channel contraction and cost pressure, brands are revitalizing offline channel value with lighter-weight, digital means.” Gu Qiuming believes that deep integration of online and offline is a necessary path for new energy vehicle sales.

In response, some industry players suggest that, facing the industry trend of deep online-offline integration, automakers should accelerate building an integrated channel system with unified online hubs and diverse offline touchpoints. On one hand, they should keep strengthening online platforms such as official apps, mini programs, and livestreaming, unify orders, pricing, financial and after-sales policies, connect data across the whole user journey so that online becomes the core entry point for transactions, services, and user operations. On the other hand, they should make offline store functions lighter, more scenario-based, and more localized—focusing on experience, test drives, delivery, and service—reduce low-efficiency mall stores, and optimize channel structure.

“Automakers should also strengthen digital management capabilities, break down data barriers between online and offline, and unify service standards and the evaluation system, to avoid conflicts between channels. By improving efficiency online and strengthening the experience offline, only then can you truly achieve diversified channels, unified management, consistent service, and direct access to users—so as to maintain competitiveness and sustainable development through channel transformation.” Gu Qiuming said.

(Editor: Liu Chang ）

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