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.
“I’d be hard pressed to declare Tesla a winner in China,” said Bill Russo, Shanghai-based founder and CEO of Automobility, “they are struggling to keep pace and have a limited and aging product portfolio.”
The trade barriers would force Chinese automakers to find buyers at home and in the “smaller, friendlier” foreign markets, adding pressure on Tesla’s China as well as global sales, Sam Fiorani, vice president of AutoForecast Solutions said.

Tesla models Y and 3 are displayed at a Tesla dealership in Corte Madera, California, on Dec. 20, 2024.
Justin Sullivan | Getty Images

Electric vehicle-maker Tesla’s sales in China climbed to a record high last year. Sustaining that performance in 2025 could prove tricky as competition with homegrown players intensifies, analysts said.

The U.S. 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 units, according to Tesla China.

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, according to Bill Russo, founder and CEO of Automobility, who believes Tesla is “struggling to keep pace [with domestic rivals] and has a limited and aging product portfolio.”

Brand resiliency 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 keep up its momentum in 2025, given the lack of new products and increased local competition, especially from Chinese companies.

Aggressive price war

Tesla slashed the price for its best-selling Model Y in China by 10,000 yuan ($1,364.5) in late December and extended a zero-interest five-year 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 had cut its prices by 14,000 yuan in April — according to its website.

Still that marked a significant premium over a swath of 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, and the more affordable Yuan Plus model, starting at 96,800 yuan.

  People look at a 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 cash subsidies of 15,000 yuan per purchase along with a three-year zero-interest financing scheme, according to a post last Thursday on its social media Weibo account. Nio also extended a similar three-year zero-interest loan plan for its EV buyers.

The purchasing incentives came on top of Chinese authorities’ push 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.

The government-subsidized trade-in program could further lower prices for both Model 3 and Model Y by up to 50,000 yuan, Tesla China said.

“Tesla has to discount aggressively to keep pace with the ongoing price war in the market,” Russo noted.

Despite dwindling market share, Tesla is unlikely to lose its ground completely in China, according to Joe McCabe, CEO and president of AutoForecast Solutions, who compared Tesla as “the Apple of cars” — an “early adopter” in the EV space with “phenomenal” technology.

“I don’t think Tesla is at risk of not surviving,” McCabe added, “all [Elon Musk] has to do is drop the price by 5%, because he can, and that will help for little blips.”

Head-to-head race

In addition to lowering prices, Chinese electric carmakers have rolled out a slew of new models, many with fancy in-car features, such as projectors, embedded refrigerators and driver-assist systems.

Meanwhile Tesla has been slow in adopting any of these features, with its product portfolio focused solely on fully electric vehicles, while its homegrown rivals have steered into plug-in hybrid cars and extended-range EV categories.

These more traditional models appeal to buyers who are “still worried about the leap to fully electric [cars],” Sam Fiorani, vice president of AutoForecast Solutions said. “Tesla has no plans for anything other than fully electric vehicles.”

The automaker’s plans of launching its full self-driving supervised system still hinges on regulatory permission in China, while several local competitors have made the advanced driver-assistance systems a basic part of their offering, including BYD.

Musk had warned in January that Chinese automakers could “demolish most other car companies in the world” unless regulators intervene with trade barriers, as the Warren Buffet-backed BYD overtook Tesla as the world’s top-selling EV company in the last quarter of 2023.

The U.S. imposed a 100% duty on Chinese EVs last September to protect its homegrown industries from the pricing pressure posed by heavily-subsidized peers from China. The European Union has also moved to impose tariffs as high as 45.3% on Chinese EV cars imported late last year, while Tesla enjoyed a lower tariff rate of 7.8%.

The trade barriers would force Chinese automakers to find buyers at home and in the “smaller, friendlier” foreign markets, adding pressure on Tesla’s sales in China and elsewhere, Fiorani added.

Tesla’s sales of China-made EV cars including exports to foreign markets fell modestly by 0.4% from a year ago to 93,766 units in December, according to CNBC’s calculation of China Passenger Car Association data.

BYD, which is subject to 17% tariff duties for car exports to European Union, still led the rank with 509,440 cars sold in December, a near 50% year-on-year jump.