Tesla Models Y and 3 are on display at the Tesla dealership in Corte Madera, California, on December 20, 2024.
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Electric car maker Tesla's sales in China rose to a record high last year. Analysts said that maintaining this performance in 2025 may be difficult as competition with local players intensifies.
The American electric car maker saw annual sales in China jump 8.8% to a record high of more than 657,000 vehicles in 2024. In December alone, its sales rose 12.8% from the previous month to 83,000 units, according to Tesla China.
However, Tesla has lost market share to Chinese NEV makers, falling from 7.8% in 2023 to 6% in January-November last year, according to Bill Russo, founder and CEO of Automobility, who believes That Tesla is the best. “It struggles to keep up with local competitors and has a limited and outdated product range.”
Tu Lu, founder and managing director of Sino Auto Insights, said brand flexibility and price cuts have supported Tesla's sales so far, but he was not sure Tesla could maintain its momentum in 2025, given the lack of new products and increased domestic competition. Especially from Chinese companies.
Aggressive price war
Tesla has reduced the price of its best-selling Model Y in China by 10,000 yuan ($1,364.5) in late December It extended the five-year interest-free loan plan for car buyers until the end of January.
The best-selling Model Y now starts at 239,900 yuan after 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.
That still represents a significant premium over the range of cheaper models offered by Chinese domestic automakers. BYD, which has dominated the market with a market share of about 34%, is pricing one of its best-selling models Seagull is priced at 136,800 yuanand the less expensive Yuan Plus model, Starting from 96,800 yuan.
TOPSHOT – People look at the BYD Seagull by Chinese electric vehicle manufacturer BYD Auto at the Bangkok International Motor Show in Nonthaburi on March 27, 2024. (Photo by Lilian Sowanrumpha/AFP) (Photo by Lilian Sowanrumpha/AFP via Getty) PHOTOS )
Lillian Swanrumfa | AFP | Getty Images
As the price war extends into the new year, Li Auto has offered a cash subsidy of 15,000 yuan per purchase along with a three-year interest-free financing plan, according to China's official Xinhua news agency. Posted last Thursday on her account on the social networking site Weibo. Neo too Extend the similar benefit for three years Loan plan for electric car buyers.
The purchase incentives came on top of the Chinese authorities' efforts to expand the Consumer Goods Trade Program, which supports consumers to trade in old cars or appliances and buy new cars at a discount.
Tesla China said the government-backed trade-in program could cut prices for both the Model 3 and Model Y by up to 50,000 yuan.
“Tesla must make significant discounts to keep up with the ongoing price war in the market,” Russo noted.
Despite its dwindling market share, Tesla is unlikely to completely lose ground in China, according to Joe McCabe, CEO and president of AutoForecast Solutions, who compared Tesla to the “Apple of Cars” — an “early adopter” in the electric vehicle space with “Immense technology.
McCabe added: “I don't think Tesla is at risk of not surviving. All (Elon Musk) has to do is lower the price by 5%, because he can, and that will help with small fluctuations.”
Head to head racing
In addition to cutting prices, Chinese electric car makers have introduced a slew of new models, many of which are equipped with Luxury features inside the carsuch as projectors, compact refrigerators and driver assistance systems.
Meanwhile, Tesla has been slow to adopt any of these features, with its product portfolio focused solely on fully electric vehicles, while its domestic competitors have moved into hybrids and long-range EV categories.
These traditional models appeal to buyers who are “still nervous about the jump to all-electric[vehicles],” said Sam Fiorani, vice president of AutoForecast Solutions. “Tesla has no plans for anything other than fully electric cars.”
The automaker's plans to launch its full self-driving supervision system are still underway Depends on regulatory permission In China, while many local competitors have done so They have made advanced driver assistance systems a core part of their offeringIncluding BYD.
Musk warned in January that Chinese automakers might do so “Demolishing most of the other car companies in the world.” Unless regulators step in with trade barriers, Warren Buffett-backed BYD overtook Tesla as the world's best-selling electric car company in the fourth quarter of 2023.
US Imposing 100% tariffs on Chinese electric cars Last September, to protect its local industries from pricing pressures imposed by its counterparts, which are heavily supported by China. The European Union also moved to Imposing customs duties of up to 45.3% on Chinese electric cars imported late last year, while Tesla enjoyed a lower tariff rate of 7.8%.
Fiorani added that trade barriers will force Chinese automakers to find buyers at home and in “smaller, friendlier” overseas markets, increasing pressure on Tesla sales in China and elsewhere.
Tesla's sales of electric vehicles made in China, including exports to overseas markets, declined modestly 0.4% from last year to 93,766 units In December, according to CNBC's calculations of China Passenger Vehicle Association data.
BYD, He Subject to 17% customs duty As for car exports to the EU, it still leads the way with 509,440 cars sold in December, a jump of almost 50% year-on-year.
— CNBC's Evelyn Cheng and Sonia Heng contributed to this report.
