Tesla models Y and 3 are displayed at a Tesla dealership in Corte Madera, California, on December 20, 2024.
Justin Sullivan | Getty Images
Electric vehicle manufacturer Tesla's sales in China climbed to a record high last year. Maintaining that performance in 2025 could be difficult as competition against domestic players will intensify, analysts said.
The US electric vehicle maker saw 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 unit, according to Tesla China.
However, Tesla has been losing market share to Chinese electric vehicle players, down from 7.8% in 2023 to 6% in the period January to November last year, according to Bill Russo, founder and CEO of Automobility, who believes that Tesla. “Struggles to keep up (with domestic competitors) and has a limited and old product portfolio. “
Brand stability and price cuts have supported Tesla's sales so far, said Tu Le, founder and managing director of Sino Auto Insights, but he was less certain that Tesla could sustain its momentum in 2025, as there is a lack of new products and more local competition. , especially from Chinese companies.
Aggressive price war
Tesla lowered the price of its best-selling Model Y in China with 10,000 yuan ($1,364.5) at the end of December and extended a 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 the discount, while the Model 3 sedan starts at 231,900 yuan – Tesla had cut its prices by 14,000 yuan in April – according to her website.
But that marked a steep premium over several cheaper models offered by domestic Chinese automakers. BYD, which dominated the market with about 34% of the market share, is pricing one of the best-selling models Seagull at 136,800 yuanand the more affordable Yuan Plus model, starting at 96,800 Yuan.
TOPSHOT – People look at the BYD Seagull car by Chinese electric vehicle (EV) manufacturer BYD Auto at the Bangkok International Motor Show in Nonthaburi on March 27, 2024. (Photo by Lillian SUWANRUMPHA / AFP) (Photo by LILLIAN SUWANRUMPHA/AFP via Getty Images)
Lillian Suwanrumpha | Afp | Getty Images
As the price war extends into the new year, Li Auto introduced a cash subsidy of 15,000 yuan per purchase along with a three-year zero-interest financing scheme, according to posted last Thursday on his Weibo social media account. No too A similar three-year zero interest extended loan plan for the EV buyers.
The purchase incentives came on top of an effort by Chinese authorities to expand the consumer goods trade-in program, which subsidizes consumers to trade in old cars or appliances and buy new ones at a discount.
The government-subsidized trade-in program could reduce prices for both the Model 3 and Model Y by up to 50,000 yuan, Tesla China said.
“Tesla will have to make a strong discount to keep up with the ongoing price war in the market,” Russo said.
Despite declining market share, Tesla is unlikely to lose ground completely in China, according to Joe McCabe, CEO and president of AutoForecast Solutions, which compared Tesla as the “Apple of cars” – an “early adopter” in the EV space with “amazing technology”.
“I don't think Tesla is in danger of not surviving,” said McCabe, “all (Elon Musk) has to do is drop the price by 5%, because he can , and that helps with a few strokes.”
A head-to-head race
In addition to lowering prices, Chinese electric car makers have introduced several new models, many of them with interesting features in the carsuch as projectors, embedded coolers and driver assistance systems.
Meanwhile Tesla has been slow to adopt any of these features, with its product portfolio focused primarily on fully electric vehicles, while its domestic rivals have led the way into plug-in hybrid cars and broad EV segments.
These more traditional models appeal to customers who are “still worried about the jump to full electric (cars),” said Sam Fiorani, vice president of AutoForecast Solutions. “Tesla has no plans for anything but full electric vehicles .”
The automaker's plans to launch the fully supervised self-driving system are still on hold subject to regulatory approval in China, and has several local competitors made the advanced driver assistance systems a basic part of their offeringincluding BYD.
Musk had warned in January that Chinese manufacturers could “demolished most other car companies in the world” unless regulators act on trade barriers, as Warren Buffet-backed BYD overtakes Tesla as the world's best-selling EV company in the last quarter of 2023.
The USA they put a 100% duty on Chinese EVs last September to protect their domestic industries from the price pressure exerted by heavily subsidized peers from China. The European Union has also moved to set targets as high as 45.3% on Chinese EV cars imported late last year, while Tesla had a lower tariff rate of 7.8%.
The trade barriers would force Chinese automakers to find buyers at home and in “smaller and friendlier” foreign markets, putting pressure on Tesla's sales in China and elsewhere, Fiorani said. .
Tesla's sales of EV cars made in China including exports to foreign markets fell slightly by 0.4% from a year ago to 93,766 units in December, according to CNBC calculations on China Passenger Car Association data.
BYD, yes subject to 17% transfer duties. for car exports to the European Union, they were still above the level 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.
