Tesla’s sales in China hit a record high in 2024. | Wilnesh News

Electric car maker Tesla’s sales in China climbed to a record high last year. Analysts say maintaining this performance in 2025 may be difficult as competition with local players intensifies.

The U.S. electric vehicle maker’s annual sales in China will grow 8.8% in 2024, reaching a record high of more than 657,000 vehicles.

However, Automobility founder and CEO Bill Russo said Tesla’s market share has been losing to Chinese new energy vehicle manufacturers, falling from 7.8% in 2023 to between January and November last year. 6%. “

Tu Le, founder and managing director of Sano Automotive Insights, said that brand flexibility and price cuts have supported Tesla’s sales so far, but given the lack of new products and intensifying local competition, he is not sure about Tesla. Can it maintain growth momentum in 2025?

Tesla slashes price of best-selling Model Y in China An increase of RMB 10,000 (USD 1,364.5) at the end of December It also extended a five-year, zero-interest loan program for car buyers until the end of January.

Its best-selling Model Y starts at 239,900 yuan after discounts, while the Model 3 sedan starts at 231,900 yuan – Tesla already cut prices by 14,000 yuan in April – According to its website.

Still, that’s a significant premium over a range of cheaper models offered by China’s domestic automakers. BYD dominates the market with about 34% market share, pricing one of its best-selling models Seagull 136,800 yuanas well as the more affordable Yuan Plus model, Starting from 96,800 yuan.

According to reports, as the price war continues into the New Year, Li Auto has launched a cash subsidy of 15,000 yuan for each purchase and a three-year zero-interest financing plan. A post on his social media Weibo account last Thursday. NIO Extend a similar three-year zero interest rate Offers loan programs to buyers of its electric vehicles.

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

Tesla China said the government-subsidized trade-in program may further reduce the prices of Model 3 and Model Y by up to 50,000 yuan.

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

Joe McCabe, CEO and president of AutoForecast Solutions, said that despite the shrinking market share, Tesla is unlikely to completely lose market share in China. He compared Tesla to the “Apple of the automobile industry” – the “Apple of the electric vehicle industry”. Early adopters of “extraordinary” technology.

“I don’t think there’s a risk that Tesla won’t survive,” McCabe added. “All (Musk) has to do is lower the price by 5%, because he can, and that will help alleviate some of the hiccups.

In addition to lowering prices, Chinese electric car makers have launched a slew of new models, many of which come with Beautiful in-car features such as projectors, built-in refrigerators and driver assistance systems.

The automaker’s plans to roll out a fully autonomous driving regulatory system still depend on approval from Chinese regulators, while several local rivals have already Make advanced driver assistance systems an essential part of its productsincluding BYD.

Musk warned in January that Chinese automakers could “Destroying most other car companies in the world” Warren Buffett-backed BYD will overtake Tesla as the world’s best-selling electric car company in the final quarter of 2023 unless regulators intervene to block trade.

USA Impose 100% tariff on Chinese electric vehicles Last September, it sought to protect its local industry from pricing pressure from heavily subsidized peers in China. At the end of last year, the EU also imposed tariffs of up to 45.3% on imported electric vehicles from China, while Tesla enjoyed a lower tariff of 7.8%.

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

Sales of Tesla’s China-made electric vehicles, including exports to foreign markets, fell slightly Increased 0.4% year-on-year to 93,766 vehicles In December, according to CNBC’s calculations of data from the China Passenger Car Association.

BYD, which exports cars to the EU and is subject to a 17% tariff, still ranked first in sales in December, with sales of 509,440 vehicles, an increase of nearly 50% over the same period last year.

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