Tesla is having a tough time these days. For myriad reasons, the maker of all-electric vehicles is struggling. In fact, the company’s second-quarter 2025 sales figures were down around 13 percent compared to the same period last year, which is obviously not good. Sales are even slumping in China, the largest vehicle market in the world.
That Sinking Feeling
According to a report from Electrek, Tesla delivered 128,803 vehicles in China in the second quarter of 2025, a 4.3 percent drop compared to the first quarter. Contrast this to the same period last year, and the performance is even worse. New vehicle deliveries dropped by nearly 12 percent when looking at the second quarter of 2024 and the second quarter of 2025.
As for the overall market, the China Passenger Car Association (CPCA) notes that vehicle sales in the Asian nation hit nearly 2.1 million units last month. That’s an 18.1 percent increase compared to June of 2024, and a 7.6 percent month-over-month jump. As reported by the Global Times, “The CPCA attributed the robust growth to the expanded and intensified rollout of the country’s fresh round of large-scale equipment upgrades and trade-ins of consumer goods, as well as subsidy policies, which delivered a notable ‘policy dividend’ and effectively fueled market demand.”
For Tesla, this is all obviously bad news, and for several reasons. One, electrified and pure electric vehicles (so-called new-energy vehicles) are hugely popular in China, so Tesla should have no trouble moving the metal, yet sales are still sagging. Two, the Model Y battery-powered SUV, one of the world’s most popular cars regardless of powertrain, was just refreshed, something that should help bolster showroom performance, but isn’t. And three, Tesla is also offering some generous incentives on the Model Y, including 0 percent financing, which could save drivers anywhere between $2,000 and $4,000, a significant amount. With all these upsides, new vehicle sales should be growing, not dropping by double-digits.
TopSpeed’s Take
So, why are Tesla’s sales declining in China? Well, probably the top reason is competition, absolutely ruthless competition. There are numerous domestic manufacturers in the country, and many of them are making some groundbreaking EVs. BYD, for instance, introduced the Han L and Tang L models a few months back, and each of these vehicles can DC fast charge at up to 1,000 kilowatts, a staggering performance. In the case of models like the Seagull or the Wuling Mini, Chinese domestic vehicles can also be super affordable, undercutting Tesla by thousands.
China is the best place in the world to sell EVs, but with so much local competition, it’s hard to see how Tesla could regain momentum in the country without making radical changes to its products or business model. How the company will react to these changing market conditions remains to be seen.
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