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Business Insider
10-07-2025
- Automotive
- Business Insider
Tesla's rivals in China are launching a wave of new Model Y killers to take on the best-selling SUV
China may not care about Elon Musk's politics, but that doesn't mean things are going well for Tesla there. Despite Tesla's sales in China rising in June amid upbeat sales of the refreshed version of its Model Y SUV, the electric vehicle giant is stuttering in its second-largest market. Tesla sold 129,000 vehicles in China during the second quarter of 2025, according to data from the China Passenger Car Association, down nearly 12% from the same period last year. Sales of the Model Y, Tesla's most popular car and China's best-selling SUV, have been flat since 2022 — and it's now set to face a new wave of competition. Last month, smartphone giant-turned EV maker Xiaomi launched its YU7 electric SUV, which amassed more than 240,000 preorders in 24 hours, while EV startup Xpeng debuted the G7, its Model Y rival, a week later to strong early demand. Both cars are priced below the Model Y, and are set to be joined by Nio's L90, another electric SUV that will go on sale later this month. Lei Xing, an independent analyst covering the Chinese auto industry, told Business Insider that Tesla has weathered attempts to dethrone the Model Y before. But, he added, Elon Musk's automaker has never faced a challenge quite like the YU7, which has taken China by storm. "I think it's the Model Y killer. There's been a lot of rivals that have come before it, and the Model Y has been very resilient, but the YU7 seems to be the one that can overtake it," he said. Xiaomi's EV revolution Xiaomi scored a massive hit with its first EV, the SU7, selling more than 200,000 since it launched in March 2024. The company faced a crisis earlier this year when an SU7 was involved in a fatal highway crash, but the sedan has continued to sell well. Lei Xing said that Xiaomi's cars had proved extremely popular with women and young people. In comments posted on social media last week, Xiaomi CEO Lei Jun said that the average age of YU7 preorder holders was 33, and around 30% came from women. Lei Xing added that the company had successfully tapped into a massive, tech-obsessed consumer base of "fanatics" that already own multiple Xiaomi products. He said one of the earliest SU7 buyers in Shanghai told him he owned around 300,000 yuan ($41,000) of Xiaomi products in his home in addition to the company's first EV. "Xiaomi over the last 15 years has expanded their product lineup to all sorts of devices. They've built this home-car-human connection. And now that last missing piece is the car," said Lei Xing. Snow Bull Capital CEO Taylor Ogan, whose Shenzhen-based firm invests in the EV and battery industry, told BI that Xiaomi's tech ecosystem had handed the company a major advantage in China's ultra-competitive market. "My home has over 15 Xiaomi devices, my TV is Xiaomi, my bed is a Xiaomi. This is very common in China — once you're in the ecosystem, it's really hard to get out of," Ogan said. Losing ground on tech Lei Xing said that while Tesla was still the "benchmark" for many Chinese automakers in terms of tech, the US firm was now behind on some key features, such as advanced driver assistance systems. Musk has previously said that Tesla's attempts to launch its Full Self-Driving system have been hampered by Chinese rules around data sharing. The company launched a limited version of FSD in China earlier this year, but it charges Tesla owners around $8,000 to access it, unlike many of its rivals, who have begun offering similar systems for free. "On ADAS, because of some of the regulatory restrictions, Tesla is behind in China," said Lei Xing. "These features are becoming commoditized. The BYD Seagull offers highway ADAS as standard. Customers have come to expect these kinds of things," he added. Ogan said that Tesla still has a good reputation in China, but the company's ageing product lineup and tech have left it vulnerable. "Tech-wise, there are probably 10 companies that have better tech. Xiaomi definitely has better tech than Tesla. It has better motor tech, it has better infotainment, and it actually makes a lot of its own tech," Ogan said, who is an investor in Chinese auto giant BYD. "Tesla is just refreshing the bumpers and their headlights and adding an LED strip in the car. That might work enough in Western markets, but it's not enough in today's market here," he added. Ogan said that Tesla's previous tactic of lowering prices to fend off competition would likely be less effective now that many of its rivals offer cheaper models, and said that some Tesla showrooms had turned to new tactics to boost sales. "The one that's nearest to me, almost every night they're hiring street performers to perform outside of their showroom to try to drive traffic," he said. 'They're nowhere to be seen' One thing that might help Tesla fend off the threat of the YU7 in the short term is the painfully long delivery times for Xiaomi's new EV. The company's website is advertising delivery times of up to 60 weeks for the YU7. Lei Xing said some customers unhappy about the prospect of waiting over a year for the high-tech SUV might instead turn to the Model Y. Xiaomi CEO Jun himself backed that idea, telling his social media followers they should consider buying rival models like Xpeng's G7 and the Model Y if they're in a "hurry." In the long run, however, that is unlikely to solve Tesla's main problem in China: a lack of new products. "They haven't launched a new product in years," Tu Le, the managing director at Sino Auto Insights, told BI. "The reality is that Tesla doesn't face an Elon personality challenge in China like it does in the rest of the world. It is a lack of competitive products in the Chinese market that is causing Tesla problems," he added.
Wall Street Journal
08-07-2025
- Automotive
- Wall Street Journal
Trump's Megabill Gives Chinese EV Makers a Leg Up, Says Head of Auto Group
The U.S. megabill that President Trump signed into law on July Fourth favors obsolete gasoline-powered cars and hands Chinese electric-vehicle companies a win globally, said the head of a Chinese auto industry group. 'Chinese homegrown brands' exports will see significant growth in the next few years, and the U.S. bill should give China greater room to develop in overseas markets,' said Cui Dongshu, the secretary-general of the China Passenger Car Association, on Tuesday.
Wall Street Journal
08-07-2025
- Automotive
- Wall Street Journal
China June Car Sales Rise Despite Pressure to Stabilize Prices
China's auto sales grew sharply in June even as carmakers began reducing inventories amid increased government scrutiny of the industry's pricing practices. Retail sales of passenger cars rose 18% from a year earlier last month to 2.1 million vehicles, data from the China Passenger Car Association showed Tuesday. Sales of passenger cars increased 7.6% from May.
The Star
06-07-2025
- Automotive
- The Star
China's EV price war dashes profit hopes of 90% of brands, AlixPartners says
Less than 10 per cent of electric vehicle (EV) brands in China will turn a profit in the next five years, as the industry grapples with a price war and chronic overcapacity, according to AlixPartners. However, the country's top EV players were expected to double their market share in Europe to 10 per cent by 2030, the consultancy said in its latest report on the global car industry on Thursday. Of the 129 EV brands currently produced by about 50 carmakers, only 10 of them - up to 15 in an optimistic scenario - were expected to become profitable by 2030, and they could account for nearly 75 per cent of the mainland's EV market, said Stephen Dyer, Greater China co-leader and head of Asia automotive practice at AlixPartners. 'China is one of the most competitive new-energy vehicle markets in the world, with intense price wars, rapid innovation and new entrants constantly raising the bar,' he said. 'This environment has driven remarkable advances in technology and cost efficiency, but it has also left many companies struggling to achieve sustainable profitability.' Dyer said the number of profitable EV makers could fall to fewer than 10 by 2030 if the unrelenting discounts continue, further squeezing profit margins. By 2030, EVs – which comprise pure electric and plug-in hybrids – would account for 76 per cent of the mainland's new car sales, or 20 million units, AlixPartners estimated. China was the world's largest automotive market in 2024, with EV sales accounting for more than 60 per cent of the global total, according to the China Passenger Car Association. But only half of the nation's EV production capacity of 20 million units a year was utilised in 2024, according to AlixPartners. Among the mainland EV builders, only BYD, the world's largest EV maker; Li Auto, Tesla's nearest rival in China; and Aito, backed by telecommunications equipment giant Huawei Technologies, are profitable. Dyer said an ongoing discount war could accelerate the pace of consolidation in China's EV sector, with players selling fewer than 1,000 units a month likely to be edged out soon. Chinese carmakers cut prices on a total of 70 EVs and petrol models in the final week of May, according to the 21st Century Business Herald newspaper, capitalising on state subsidies to draw buyers. Beijing offers a 20,000 yuan (US$2,790) trade-in rebate for EV purchases and 15,000 yuan for petrol-powered cars. EV buyers are also exempt from paying a 10 per cent sales tax. Chinese EV builders were also leveraging cost advantages and other incentives, such as insurance subsidies, cash rebates and zero-interest financing, to maintain market share and improve affordability, Dyer said. Nick Lai, head of auto research in Asia-Pacific at JPMorgan, told the Post in May that buoyant exports would help shore up Chinese EV makers' profitability because their cars enjoy bigger margins overseas. AlixPartners predicted that Chinese EV makers would boost their annual production in Europe by 800,000 units by 2030, without providing details. Chinese EVs face additional tariffs of 17 to 35.3 per cent in the European Union since October following a year-long anti-subsidy investigation. - SOUTH CHINA MORNING POST
The Star
04-07-2025
- Automotive
- The Star
New energy vehicles drive overseas growth
BEIJING: China's automobile exports are experiencing a remarkable surge, driven by logistics upgrades and new energy vehicle (NEV) dominance. Chinese leading NEV maker BYD received its sixth roll-on/roll-off ship on Tuesday. Named BYD Changsha, the vessel is capable of carrying 9,200 vehicles. Three days before that, the company received another ship with the same capacity named BYD Xi'an. That ship has set sail from Taicang, Jiangsu province, in eastern China. It is heading toward European countries including Italy, the United Kingdom, Spain, and Belgium. With two more vessels scheduled for delivery this year, BYD will boost the fleet's annual capacity to more than 60,000 vehicles, enhancing overseas delivery efficiency and cutting costs and transport cycles for BYD. The logistics expansion also mirrors the broader industry's push to conquer global markets. This maritime upgrade comes as China's automobile exports hit 2.83 million units from January to May, growing 16% year-on-year (y-o-y), according to data from the China Passenger Car Association (CPCA). In the first five months, the primary destinations for these exports included Mexico, the United Arab Emirates, Russia, Brazil and Belgium. Notably, the United Arab Emirates and Mexico experienced the largest increases from the corresponding period in 2024, with rises of 74,046 and 47,595 units, respectively. Conversely, Russia saw a decline of 64% y-o-y. This was due to Russia's policy of protecting its domestic auto industry, including higher car loan rates and a scrap tax on imports. In May alone, China recorded 682,000 vehicle exports, up 20% y-o-y and 12% month-on-month. NEVs emerged as the growth engine, with 296,000 units exported in May, accounting for 43% of total exports. Cumulative January to May NEV exports reached 1.16 million units, up 33% y-o-y. Cui Dongshu, secretary-general of the CPCA, said that Chinese NEV exports in 2025 performed better than expected. Plug-in hybrids and hybrids are replacing pure electric vehicles (EVs) as growth drivers, especially plug-in hybrid pickups which stand out among commercial vehicle exports. Cui added that Chinese NEV exports are undergoing a transformative phase of high-quality development with a strategic focus on the Middle East and developed economies, especially markets in Western Europe and Asia. At the Chongqing auto show in mid-June, Huang Zhiming, chairman of Shanghai Zhida Technology Development, put forward a three-step framework for Chinese automakers seeking international expansion. He emphasised the importance of 'going out' to boost market share and brand recognition, 'going in' for local production and sales establishment, and 'going up' to elevate product quality, technology, and brand image for enhanced global competitiveness. Huang also underscored the importance of close collaboration with local industries, governments, and enterprises to assist market penetration and gain local acceptance. Automakers like BYD and Chery are leading the vanguard of China's automotive global expansion. Chery shipped 442,000 vehicles in the first five months of 2025, up 1.6% y-o-y. BYD's exports doubled y-o-y to 382,000 units during the same period. Duval de Vasconcelos Barros, Brazil's deputy consul general in Chengdu, said Chinese NEV brands sold more than 110,000 units in Brazil in 2024, capturing a market share of 65%. 'Chinese automakers BYD, Chery and Great Wall have already invested in building factories in Brazil, and GAC Group also plans to establish a plant in Brazil in the second half of 2026,' he said. He added that localising production in Brazil was becoming one of the best choices for Chinese automakers to expand into the Latin American market. Besides, global market expansion necessitates a nuanced approach that takes into account regional specifics. Thailand, which currently has only one EV testing laboratory, has called on Chinese automakers entering Thailand to not only introduce NEVs and technology but also collaborate to establish more EV testing labs, enhancing the country's infrastructure and consumer confidence in EVs. Edmund Araga, president of the Electric Vehicle Association of the Philippines, said that the country values the fusion of foreign and local standards in promoting NEVs. They look forward to Chinese automakers sharing local case studies upon entering the market. The China Association of Automobile Manufacturers forecasts export growth to slow to 5.8% in 2025, ending an era of hyper-expansion. Yet the NEV sector remains robust, fuelled by technological innovation and rising demand in developing and developed economies alike. -— China Daily/ANN
