Tesla’s Model Y and 3 are shown at a Tesla dealership in Corte Madera, California, on December 20, 2024.
Justin Sullivan | Getty Images
Sales of electric vehicle manufacturer Tesla in China rose to a record level last year. Sustaining that performance in 2025 could prove difficult as competition from domestic players intensifies, analysts say.
The American electric vehicle maker saw its annual sales in China jump 8.8% to a record high of more than 657,000 cars in 2024. In December alone, its sales rose 12.8% from the previous month to 83,000 units, according to Tesla China.
However, Tesla is losing market share to Chinese new energy vehicle players, from 7.8% in 2023 to 6% in January-November last year, according to Bill Russo, founder and CEO of Automobility, who believes Tesla is “struggling to keep up [with domestic rivals] and has a limited and outdated product portfolio.”
Brand resilience and price cuts have supported Tesla’s sales so far, said Tu Le, founder and director of Sino Auto Insights, but he was not sure Tesla could sustain its momentum in 2025, given the lack of new products and increased local competition. , especially from Chinese companies.
Aggressive price war
Tesla has cut the price of its best-selling Model Y in China for 10,000 yuan ($1,364.5) in late December and extended a five-year interest-free loan plan for car buyers until the end of January.
Its best-selling Model Y now starts at 239,900 yuan after the discount, while the Model 3 sedan starts at 231,900 yuan — Tesla cut its prices by 14,000 yuan in April — according to its website.
Still, it marked a significant premium over a range of cheaper models offered by China’s domestic automakers. BYD, which dominated the market with around 34% market share, values one of its best-selling models Seagull from 136,800 yuanand the more affordable Yuan Plus model, starting at 96,800 yuan.
As the price war extends into the new year, Li Auto has introduced cash subsidies of 15,000 yuan per purchase along with a three-year interest-free financing scheme, according to post last Thursday on his Weibo account on the social networking site. Nio too extended a similar three-year zero interest rate loan plan for its electric vehicle buyers.
The purchase incentives come on top of efforts by Chinese authorities to extend the consumer goods trade-in program, which subsidizes consumers to trade in old cars or appliances and buy new ones at a discount.
A government-subsidized trade-in program could further reduce prices for the Model 3 and Model Y by up to 50,000 yuan, Tesla China said.
“Tesla needs to aggressively discount to keep up with the ongoing price war in the market,” Russo noted.
Despite the shrinking market share, Tesla is unlikely to completely lose ground in China, according to Joe McCabe, CEO and president of AutoForecast Solutions, who likened Tesla to the “Apple of cars” — an “early mover” in electric vehicles with “a phenomenal ” technology.
“I don’t think Tesla is in any danger of not surviving,” McCabe added, “everything [Elon Musk] he has to lower the price by 5%, because he can, and that will help for small mistakes.”
One on one race
In addition to the price cuts, Chinese electric car manufacturers have released a number of new models, many of them with fancy features in the carsuch as projectors, built-in coolers and driving assistance systems.
Tesla, meanwhile, has been slow to adopt any of these features, with its product portfolio focused solely on fully electric vehicles., while its domestic competitors have focused on plug-in hybrid cars and extended-range electric vehicle categories.
These more traditional models appeal to customers who are “still concerned about going all-electric.” [cars]said Sam Fiorani, vice president of AutoForecast Solutions. “Tesla has no plans for anything but fully electric vehicles.”
The automaker still plans to launch its fully self-driving supervised system subject to regulatory approval in China, while several domestic competitors are have made advanced driver assistance systems a core part of their offeringincluding BYD.
Musk warned in January that Chinese automakers could “destroy most other car companies in the world” unless regulators intervene with trade barriers, as Warren Buffet-backed BYD overtakes Tesla as the world’s best-selling EV company in the last quarter of 2023.
USA introduced a 100% tariff on Chinese electric vehicles last September to protect its domestic industry from price pressures posed by heavily subsidized competitors from China. The European Union has also moved to impose tariffs of as much as 45.3% on Chinese EV cars imported late last year, while Tesla enjoyed a lower tariff rate of 7.8%.
Trade barriers would force Chinese automakers to find buyers at home and in “smaller, friendlier” foreign markets, adding pressure on Tesla’s sales in China and elsewhere, Fiorani added.
Tesla’s sales of electric cars made in China, including exports to foreign markets, fell modestly by 0.4% compared to the year before to 93,766 units in December, according to CNBC’s calculation of data from the China Passenger Car Association.
BYD, which is subject to customs duty of 17%. for car exports to the European Union, continues to lead the way with 509,440 cars sold in December, an almost 50% jump compared to last year.
—CNBC’s Evelyn Cheng and Sonia Heng contributed to this report.
