Tesla is getting crushed in China, its most important market outside the United States and one that it had dominated for years.
When Liu Jie, 32, decided to buy an electric car in October, Tesla was one of her top choices. But after test-driving a few Chinese cars, she went with a sports sedan from Xiaomi, a consumer gadget maker better known for its smartphones, kettles and robot vacuums.
“Xiaomi is more fashionable,” Ms. Liu said last week in Beijing. “Tesla, for me, it’s a little bit normal. You can see the Tesla Model Y everywhere.”
It’s not personal, buyers said. Tesla is still considered a top brand, and Elon Musk, Tesla’s chief executive, is admired in China. Beijing rolled out the red carpet when he broke ground on the company’s first overseas factory in Shanghai. Mr. Musk is credited with igniting China’s local electric vehicle industry.
But now that market is a blood bath of competition from Chinese rivals. Chinese drivers that once flocked to Tesla are turning more and more to local brands that offer more efficient cars with better technology, sometimes at half the price.
Tesla’s biggest rival, the electric car giant BYD, sold 481,318 cars in the first two months of this year, over three quarters more than it did over the same period last year. Tesla sold 60,480 vehicles in the first two months of the year, a drop of 14 percent from last year.
Tesla’s sales in China are plunging as the carmaker faces criticism over Mr. Musk’s role as an aide to President Trump in charge of cutting federal spending. Tesla lost about a quarter of its value over the past month as investors shunned the stock.
The threat that BYD poses Tesla in China has been building for years. BYD has sold around one million more cars each year for the past three years. The popularity of BYD has been driven in part by the fact that its cars are cheaper. It has helped that local governments sometimes steer business in the company’s direction.
But a property crisis and a broadly slowing consumer economy have hit households and badly dented people’s appetite to shop, making it hard for all carmakers. Things have become so bad that the government began offering subsidies a year ago for consumers to trade in their old cars. The government increased the incentives last week. Domestic companies have benefited from the subsidies, but so has Tesla.
Even amid the economic slowdown, there is still a market for luxury cars, for those who can afford them. Ms. Liu, who had a budget of around $41,000, said Tesla would have been an affordable luxury option compared with the $41,305 Xiaomi SU7 Max that she bought. And while Tesla offers a five-year zero-interest loan, Xiaomi does not offer any financing.
Many Chinese drivers are also willing to pay more for advanced technology like self-driving, an area in which Tesla has lagged because the government has delayed the company’s introduction of similar or better technology.
But Tesla faces another problem: demand. Sales are slowing for all cars in China.
The policies aimed at replacing gas guzzlers with electric vehicles have helped. In cities like Shanghai and Beijing, car owners can trade in older cars for a new one and get a nearly $2,100 subsidy. In some Tesla dealerships, employees have created a wall with photos of the cars that buyers have traded in — they range from Porsches to Mercedeses and even the occasional Chinese car.
Source : https://dnyuz.com/2025/03/13/china-cools-on-musk-two-cars-for-the-price-of-one-tesla
