Automotive News Europe — 2025-03-10
Automotive Industry
Tesla’s business in the world’s biggest electric-vehicle market may have seen its best days.
Elon Musk’s automaker has been backsliding in China for the past five consecutive months on a year-on-year basis, according to data from the country’s Passenger Car Association.
Tesla’s shipments plunged 49% in February from a year earlier to just 30,688 vehicles, the lowest monthly figure since way back in July 2022, when it shipped just 28,217 EVs — and that was in the middle of the COVID-19 pandemic.
Tesla’s factory on the outskirts of Shanghai has had some of its production lines retooled for efficiency and to relaunch the popular Model Y, so it’s to be expected both that output dropped and will take some time to ramp back up. But even before that, the trend was heading in the wrong direction.
The chart above shows the market shares of the top 12 automakers in China by sales for any type of car — electric, plug-in hybrid or otherwise.
Tesla, at No. 11, is well under 5% . Indeed, most automakers’ trend lines are sloping down, not up, especially the international ones.
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Then there is BYD. The company, which stopped making cars powered entirely by internal combustion engines in March 2022, has a market share heading toward 15%. It sold more than 318,000 full-electric and plug-in hybrid passenger vehicles last month, up 161% year-on-year.
The Shenzhen-based automaker also notched another record month for overseas sales, which hit 67,025 units.
Its success is a major reason why Tesla is losing.
While Tesla sales in other parts of the world are cratering as Musk wades deeper into politics many find unsavory — sales in Germany plunged 76% to only 1,429 cars last month, even as overall EV registrations jumped — in China, disappointing shipments have more to do with a narrow and dated lineup, particularly in the face of up-to-date and more exciting offerings from BYD and others.
Tesla and BYD sticker prices in China (Bloomberg, China Passenger Car A)
Year-end data place Tesla’s share of domestic sales at 2.6%, the lowest in 12 months, according to figures compiled by the China Automotive Technology and Research Center.
Morgan Stanley said in a note earlier this month that it expects Tesla’s China exposure “to continue to fall systematically.”
While the country accounted for 21% of Tesla’s total revenues in 2024, analysts at the investment bank project by 2030, that will fall to around 6% to 7%.
Another chart shows how BYD has muscled into Tesla’s sweet spot.
Tesla and BYD sticker price changes in China. (China Auto Market)
Both the Model Y and Model 3, the two vehicles Tesla makes in Shanghai, have only had their prices trimmed, rather than slashed, and buying one still costs around $33,500 on average.
BYD’s best-selling model this year in China, a sporty hatchback called the Song Plus, has had its sticker price reduced by between 8% to 18%, depending on the car’s specs.
The most expensive Song Plus EV retails for around $21,000 — much cheaper than a Tesla.
Another of BYD’s popular models, the Seagull, which has found around 82,435 buyers this year, comes in at an even more affordable $9,900, on average.
Chinese automakers have also significantly upped their game when it comes to localized software tailored to domestic driving conditions.
BYD said earlier this year that it’s taking advanced driver-assistance to the masses by including its God’s Eye technology in even some of its cheapest cars.
Now, features like lane keeping and adaptive cruise control will be for everyone, not only people who can afford mid- to high-end models.
Geely, China’s fourth-ranked automaker by market share, said last week that its AI-powered pilot system will be added to all of its brands, including Galaxy, Zeekr and Lynk & CO. The G-Pilot technology will enable cars to navigate highways and self-park.
Tesla launches driver-assistance capabilities in China to match domestic tech
Tesla is not standing still. Apart from its highly anticipated Model Y refresh — the SUV now features a thin LED light running across its front end, reminiscent of the Cybertruck — Tesla last month enabled driver-assistance capabilities in China similar to those marketed as Full Self-Driving, or FSD, in the U.S. The software will be switched on for customers who have paid 64,000 yuan ($8,800).
Then again, that is almost as much as what it would cost to buy an entire one of BYD’s cars.
For Tesla, a recalibration of its pricing strategies, both for its driver-assistance functions and the vehicles themselves, is paramount.
Offering tiered FSD packages, or a subscription option like what Tesla has in the U.S., could broaden the appeal of its EVs.
Chinese consumers place a lot of importance on intelligent software features in cars. That is something Tesla could capitalize on as Musk’s pulling power wanes among some consumers.
Tesla could also look to integrate more locally sourced components and leverage China’s robust supply chain so that it’s not only building cars powered by electricity, but also by technology.
BYD understands those domestic market dynamics well. The key for the company will be whether it can replicate its success in big car markets outside of China, even in the face of tariffs. It will take time and substantial investment to establish its brand abroad.