Tesla posts record China sales in 2024. But this year will be difficult

Electric car maker Tesla’s sales in China hit a record high last year. According to analysts, it may be difficult to maintain this performance in 2025 as competition from domestic players intensifies.

The US electric car maker expects annual sales in China to grow 8.8% to a record high of more than 657,000 vehicles in 2024. According to Tesla China, its sales in December alone rose 12.8% to 83,000 units compared to the previous month.

However, Tesla continues to lose market share to China’s new energy car players, causing Tesla to fall from 7.8% in 2023 to 6% in the January-November period last year. “It struggles to keep up (with domestic competitors) and has a limited and outdated product portfolio.”

Tu Le, founder and managing director of Sino Auto Insights, said brand stability and price cuts have supported Tesla’s sales so far, but he was less confident Tesla could maintain its momentum in 2025 given the lack of new products and growing domestic competition. . , especially from Chinese companies.

Tesla has cut the price of its best-selling Model Y in China increased by 10,000 yuan ($1,364.5) at the end of December and extended a five-year zero-interest loan plan for car buyers until the end of January.

Its best-selling Model Y now starts at 239,900 yuan after a discount, while the Model 3 sedan starts at 231,900 yuan — Tesla cut prices by 14,000 yuan in April — according to their website.

Still, China marked a significant premium over cheaper models offered by domestic automakers. Dominating the market with a market share of around 34%, BYD is pricing one of its best-selling models. Seagull 136,800 yuanand the more affordable Yuan Plus model, It starts at 96,800 yuan.

As the price war drags on into the new year, Li Auto has introduced cash subsidies of 15,000 yuan per purchase and a three-year zero-interest financing scheme. a post on the social media Weibo account last Thursday. Nio too extended a similar three-year zero interest period Loan plan for home buyers.

The purchase incentives come as Chinese authorities push to expand a consumer goods trade-in program that subsidizes consumers to trade in used cars or appliances and buy new ones at a discount.

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

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

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

“I don’t think Tesla is at risk of not surviving,” McCabe added, “just that (Elon Musk) should lower the price by 5% because he can, and that will help the small bumps.”

In addition to lowering prices, Chinese electric car manufacturers have released many new models. elegant car featuressuch as projectors, built-in coolers and driver 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 rivals focus on the plug-in hybrid and range EV categories.

Sam Fiorani, vice president of AutoForecast Solutions, said these more traditional models appeal to buyers who are “still nervous about making the jump to all-electric (cars).” “Tesla has no plans other than fully electric cars.”

The automaker still plans to launch a full self-driving system subject to regulatory approval In China, however, there are several local competitors has made advanced driver assistance systems a core part of its offeringincluding BYD.

Musk warned in January that Chinese automakers could “Take down most of the world’s car companies” Warren Buffett-backed BYD is set to overtake Tesla as the world’s best-selling EV company in the final quarter of 2023 unless regulators intervene with trade barriers.

USA China has imposed a 100% tariff on electric cars last September to protect their domestic industries from price pressures from their heavily subsidized Chinese peers. The European Union also passed Apply rates as high as 45.3% On imported Chinese EVs late last year, Tesla used a lower tariff rate of 7.8%.

Trade barriers will force Chinese automakers to find buyers at home and in “smaller, friendlier” overseas markets and pressure Tesla’s sales in China and elsewhere, Fiorani added.

Sales of Chinese-made EVs, including Tesla’s exports to foreign markets, fell slightly. Compared to a year ago, 0.4% – 93,766 units In December, CNBC calculated according to data from the China Passenger Car Association.

BYD, that is 17% tariff charges apply It leads the way in car exports to the European Union, with 509,440 cars sold in December, an increase of nearly 50% compared to the previous year.

—CNBC’s Evelyn Cheng and Sonia Heng contributed to this report.