Electric Vehicle Maker Tesla Faces Tough Competition in China
Tesla’s sales in China climbed to a record high last year, but sustaining that performance in 2025 may prove challenging as competition with homegrown players intensifies. The company’s sales in China jumped 8.8% to a record high of over 657,000 cars in 2024, with December sales rising 12.8% to 83,000 units.
However, Tesla has been losing market share to Chinese new-energy-vehicle players, down from 7.8% in 2023 to 6% in the January to November period last year. Analysts believe Tesla is struggling to keep pace with domestic rivals and has a limited and aging product portfolio.
To combat this, Tesla has slashed prices for its best-selling Model Y by 10,000 yuan and extended a zero-interest five-year loan plan for car buyers. Despite this, its prices remain a significant premium over cheaper models offered by Chinese domestic carmakers. BYD, which dominated the market with around 34% market share, prices one of its best-selling models Seagull at 136,800 yuan, while the more affordable Yuan Plus model starts at 96,800 yuan.
Chinese authorities have also introduced a consumer goods trade-in program, which subsidizes consumers to trade in old cars or appliances and buy new ones at a discount. This program could further lower prices for both Model 3 and Model Y by up to 50,000 yuan.
In addition to lowering prices, Chinese electric carmakers have rolled out a slew of new models, many with fancy in-car features. Meanwhile, Tesla has been slow in adopting these features, with its product portfolio focused solely on fully electric vehicles.
Tesla’s plans for launching its full self-driving supervised system in China are still pending regulatory permission, while several local competitors have already made advanced driver-assistance systems a basic part of their offering.
The US has imposed a 100% duty on Chinese EVs, while the European Union has imposed tariffs as high as 45.3% on Chinese EV cars imported. This could force Chinese automakers to find buyers at home and in smaller foreign markets, adding pressure on Tesla’s sales in China and elsewhere.
Despite these challenges, Tesla is unlikely to lose its ground completely in China, with some analysts comparing the company to Apple, an early adopter in the EV space with phenomenal technology.