Tesla's China Sales Fall to 3-Year Low Amid Intense Competition

Tesla Inc. faced a significant setback in October 2025, recording its lowest monthly sales in China in three years. The electric vehicle (EV) manufacturer sold 26,006 vehicles, marking a 35.8% decline from the same month in the previous year and a sharp drop from September's 71,525 units. (source)

This downturn is attributed to several factors, including waning demand for the recently launched Model Y L, intensified competition from domestic EV manufacturers, and broader market challenges. The decline raises concerns about Tesla's ability to maintain its foothold in the world's largest EV market.

Model Y L's Diminishing Appeal

Introduced in August 2025, the six-seat Model Y L initially garnered strong interest, contributing to a surge in September sales. However, by October, enthusiasm had faded, leading to a significant drop in sales. (source)

Surge of Domestic Competitors

Chinese EV makers like Xiaomi have gained significant traction. Xiaomi's YU7 SUV, for instance, achieved record sales of 33,662 units in October, surpassing Tesla's Model Y sales during the same period. (source)

Operational Adjustments

In response to domestic sales challenges, Tesla increased exports from its Shanghai factory, reaching a two-year high of 35,491 units in October. While this strategy aims to offset local declines, it underscores the company's struggles within China. (source)

Market Share Decline

Tesla's share of China's new energy vehicle market dropped to 3.2% in October, down from 8.7% in September, marking its lowest point in over three years. (source)

Broader Market Context

The overall Chinese auto market has weakened due to reduced consumer confidence and the phasing out of government subsidies. In October, passenger car sales growth slowed to 4.4% year-on-year, a notable decline from previous months. (source)

Investor Sentiment

These developments have impacted Tesla's stock performance. On November 12, shares closed at $430.60, down 2.05% from the previous day. (source)

Strategic Considerations

To regain momentum, Tesla may need to enhance its product offerings, adjust pricing strategies, and strengthen its understanding of local consumer preferences.

Tesla's recent performance in China underscores the challenges foreign automakers face in a rapidly evolving and competitive market. The company's ability to adapt to these dynamics will be crucial in determining its future success in the region.