tesla Sales in China fell to a three-year low in October, raising concerns that the electric car maker could suffer its first full-year sales decline in the country this year.
Fierce competition with local rivals such as NIO and lee auto (Both reported this week) And a fierce price war in the face of an economic downturn pushed Tesla’s sales in China to 26,006 units last month. US automakers’ share of China’s EV market shrank from 8.7% in September to 3.2% in October.
“Tesla is being surrounded by a swarm of Chinese automakers from top to bottom, left and right,” auto analyst Michael Dunn, CEO of Dunn Insights, told CNBC. “It’s like a swarm of drones, each with a target on its back to steal revenue from the company.”
Tesla’s newest direct competitor in the upper echelons of China’s EV market is xiaomi. The smartphone maker’s YU7 sport utility vehicle and SU7 sedan posted record sales in October despite an accident that raised concerns about the cars’ safety.
The auto novice sold about 109,000 cars in the third quarter, compared to Tesla’s 170,000. Xiaomi’s EV division became profitable for the first time.
late bloomer leap motor It’s also putting pressure on Tesla. The Chinese EV startup was founded in 2015, but it wasn’t until this year that it started outperforming its local peers in terms of sales and stock price. Analysts say in-house production keeps costs down. The company’s mid-sized SUV, the C10, costs about half the price of the Model Y. Leap Motor also has joint venture partnerships with European automakers. Stellantis.
What will drive EV sales in China this year are: geely Jiom Xinyuan. This hatchback is not a direct competitor to Tesla, as it is priced under $10,000 and is catered to a cheaper market. However, this shows that Chinese buyers are budget-conscious but still seek value.
Geome Xingyuan’s success also highlights another trend of traditional automakers such as Geely moving into EVs. This trend is turning Huawei into Tesla’s more notable rival. The Chinese tech giant has partnered with legacy automakers like Ceres; CheryBeijing Automotive. The Ceres model “Aito M8” is popular among high-end SUVs.
Despite stiff competition, Tesla’s Model Y is still doing well, ranking 6th overall in the market. At Tesla’s annual meeting this month, Musk said he expected China to approve the company’s “fully self-driving” software in early 2026.
But analysts say Tesla needs to revamp its models to keep pace with local rivals.
Tu Lee, founder of consulting firm Sino Auto Insights, sees 2026 as a “pivotal year” for Tesla in China.
“Reality is catching up with Tesla in China,” Tu said. “Tesla has done a great job of maintaining the sales of its nearly five- and four-year-old cars compared to the world’s most advanced EVs through price cuts, off-price cuts, and other tricks. But it seems that the lack of keeping up with Xiaomi, BYD, and XPeng’s cars is finally starting to show in its monthly sales.”
Tesla last month reported that its third-quarter total sales rose 12% from a year earlier to $28.1 billion, after two consecutive quarters of decline.
Despite the overall sales increase, Tesla’s third quarter continued to see weak sales in Europe, due in part to competition from EV manufacturers including: volkswagen and BYD.
