Tesla's (TSLA) China Sales Slide in July as Local EV Rivals Steal Market Share
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Key Reasons Behind the Fall
The decline comes as the EV giant faces tough competition from local rivals such as BYD (BYDDF) and Xiaomi (XIACF), offering more affordable new models in China. Importantly, Xiaomi's new YU7 SUV is a direct challenger to Tesla's Model Y.
Further, Tesla's Model Y, once a top seller in China, is slowing down. Sales dropped 17.5% in the first half of 2025 despite a refreshed version launched in January.
It must be noted that TSLA's troubles are not limited to China. Weak global demand and backlash over CEO Elon Musk 's politics led to its largest quarterly sales drop in over ten years during the second quarter.
What's Next for Tesla in China?
To counter these struggles, the EV maker plans to launch a larger, six-seater version of Model Y this fall. It is built to compete with China's popular three-row SUVs like the Li Auto's (LI) L8. With more space and better battery tech from LG, Tesla hopes this family-friendly model will help it win back buyers from local brands.
At the same time, TSLA aims to launch a longer-range, rear-wheel-drive Model 3 in China this September, called the Model 3+. The company hopes this new model will help compete with Xiaomi's SU7 sedan.
Overall, these moves are likely to bolster Tesla's position as the Chinese EV market continues to get more competitive.
Is TSLA Stock a Buy?
Turning to Wall Street, TSLA stock has a Hold consensus rating based on 14 Buys, 15 Holds, and eight Sells assigned in the last three months. At $310.84, the average Tesla price target implies a 1.22% upside potential. The stock has declined 19.98% over the past six months.
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