Core Viewpoint - The article discusses the significant shift in the sales strategy of various Chinese electric vehicle (EV) brands, moving from direct sales to a franchise model, particularly in lower-tier cities, while maintaining direct sales in first-tier cities [5][12]. Group 1: Industry Changes - Multiple EV brands, including Tengshi and Hongmeng Zhixing, are transitioning from direct sales to franchising, with plans to retain direct sales only in first-tier cities [5][6]. - The trend of converting direct sales to franchising is becoming an industry norm, with brands like Geely's Zeekr and Xiaopeng also making similar adjustments [6][7]. - The number of automotive stores in commercial areas has decreased significantly, indicating a contraction of the direct sales model [7]. Group 2: Challenges of Direct Sales - The high operational costs of direct sales are a major concern, with a single direct sales showroom costing approximately 400,000 to 500,000 yuan monthly, leading to annual costs of 12 billion yuan for 300 showrooms [9]. - Many direct sales stores are struggling with low sales volumes, often resulting in financial losses, which diminishes the perceived value of maintaining a direct sales model [9][10]. - The ongoing price war in the EV market has further pressured profit margins, with the average transaction price of EVs dropping below 160,000 yuan [9]. Group 3: Reasons for Retaining Direct Sales in Core Cities - Direct sales in first-tier cities serve as a crucial touchpoint for brand-consumer interaction, providing valuable market feedback for product development [12]. - First-tier cities have higher foot traffic and vehicle ownership, making it easier for direct sales to achieve breakeven and maintain brand visibility [12]. - Direct sales in these cities also have stronger profitability in after-sales services, as demonstrated by Tesla's successful service revenue growth [12][14].