Tesla’s shrinking foothold in China’s electric vehicle market has become a major concern for the American automaker. The company dropped to eighth place in China’s new energy vehicle market in July 2025, holding just 4.1% market share. This marks a sharp decline for Tesla, which once dominated the Chinese EV environment.
The numbers tell a troubling story. Tesla’s domestic sales in China fell 5.36% in the first half of 2025, reaching only 263,410 vehicles. Meanwhile, local competitor BYD commands 29.2% of the market, and Geely holds 12.5%. These Chinese companies are offering more affordable electric models that appeal to local buyers.
Tesla’s problems extend beyond just sales figures. The company’s exports from its Shanghai factory plummeted 31.85% in the first half of 2025 compared to the previous year. In June alone, exports dropped 56.2% from May’s numbers. The factory that once served as Tesla’s export hub for Asia is now focusing mainly on the domestic Chinese market.
Local manufacturers aren’t just competing on price. They’re offering both battery electric vehicles and plug-in hybrids, while Tesla only makes fully electric cars. Companies like Changan Automobile sold 55,659 new energy vehicles in July, showing how quickly Chinese brands are growing. The overall NEV market saw total retail sales fall below 1 million units in July, highlighting challenging conditions across the sector.
Consumer sentiment has also turned against Tesla. The company’s aging vehicle lineup isn’t exciting buyers anymore. CEO Elon Musk’s controversial public statements have alienated some Chinese consumers. These perception problems are hurting sales even as China’s overall electric vehicle market continues to grow.
Tesla did see some improvement in June 2025, with domestic sales jumping 59.3% from May to reach 61,484 units. This ended a two-month streak of year-over-year declines. However, the company’s overall market share keeps falling. July’s sales data showed 67,886 units sold in China, representing an 8.4% decline year-on-year.
The competitive pressure shows no signs of easing. Tesla ranked fifth for the January-July period with just 4.7% market share. As more Chinese automakers release competitive electric vehicles, Tesla’s position looks increasingly vulnerable. The American company that helped launch China’s EV revolution is now struggling to keep up with local competitors who’ve learned to build better, cheaper alternatives.