Tesla Faces Steep Decline in China Sales Amid Rising Domestic Competition

Tesla's sales in China have experienced a significant downturn, with October 2025 figures revealing a sharp decline amid intensifying competition from domestic electric vehicle (EV) manufacturers.

In October, Tesla sold 26,006 vehicles in China, marking a 35.8% decrease compared to the same month in the previous year. This represents the lowest monthly sales since November 2022 and a substantial drop from September's 71,525 units. Consequently, Tesla's market share in China's new energy vehicle (NEV) sector fell to 2.03%, causing the company to drop out of the top 10 NEV manufacturers in the country.

The decline is largely attributed to the rise of local competitors. Xiaomi's YU7 model, for instance, sold 33,662 units in October, surpassing Tesla's Model Y sales for the same period. Additionally, BYD led the market with a 23.1% share, despite a decrease from 26.7% in September.

Tesla's Shanghai Gigafactory, operational since 2019, produces the Model 3 sedan and Model Y SUV for both domestic and international markets. While domestic sales have weakened, exports from the Shanghai factory surged to 35,491 units in October, marking a two-year high. This shift indicates Tesla's strategic focus on overseas markets amid domestic challenges.

The broader Chinese auto market also experienced a slowdown in October, with passenger car sales growth slowing to 4.4% year-on-year, down from 11.2% in September. This deceleration is attributed to reduced government subsidies and intensified market competition. While domestic sales weakened, exports of electric and plug-in hybrid vehicles surged, doubling to approximately 250,000 units, as manufacturers like BYD and Tesla focused on expanding overseas.

Tesla's stock price reflects these challenges. On November 13, 2025, TSLA closed at $403.45, down 6.31% from the previous day. The stock experienced an intraday high of $432.00 and a low of $396.58, with a volume of 106,938,532 shares traded. This decline is part of a broader pullback in technology stocks amid investor caution.

In response to the competitive pressures, Tesla is reportedly advancing two new vehicle projects, internally codenamed E41 and D50, which are simplified versions of the current Model Y and Model 3, respectively. Production of these models in China may begin in mid-2026 or later. Additionally, on November 8, Tesla launched a new five-seat Model Y variant in China featuring an 821-kilometer range, the longest in the SUV lineup.

The downturn in China poses significant implications for Tesla's global strategy. China has been a pivotal market for Tesla, contributing significantly to its global sales. In 2024, Tesla's China sales increased by 8.8% to over 657,000 vehicles, despite a competitive market and a drop in global deliveries. The current challenges may prompt Tesla to reassess its approach in China and explore new strategies to regain its market position.

As Tesla navigates these challenges, its strategic responses will be crucial in determining its future position in both the Chinese and global EV markets.