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Monday, Jan 06, 2025
Outside the box.
Tesla Sets New Record for China Sales in 2024 Despite Worldwide Delivery Drop
Tesla's strong performance in China contrasts with a global downturn, as the company encounters growing competition and regulatory hurdles.
Tesla Inc. announced a record-breaking sale of 657,000 vehicles in China in 2024, representing an increase of 8.8% over the previous year, despite experiencing a global delivery decline for the first time in the company's history.
China, Tesla's second-largest market, was responsible for 36.7% of its total sales last year, highlighting the nation’s importance in the global electric vehicle (EV) sector.
China’s EV Market Fuels Tesla Growth
In December alone, Tesla's sales in China jumped 12.8% month-on-month to 83,000 units, setting a monthly record.
However, annual deliveries from Tesla's Shanghai plant, including both domestic and export sales, fell by 3.3% to around 260,000 units.
Export numbers decreased by 24%, affected by reduced European subsidies, a shift in U.S. demand towards hybrid vehicles, and intense competition from Chinese EV makers like BYD.
John Zeng, head of market forecasting at GlobalData, accredited Tesla's strong performance in China to the country's dominance in the global EV market.
China accounted for 70% of global EV and hybrid sales during the first 11 months of 2024 and contributed to over 90% of the global increase in EV and hybrid sales compared to 2023.
International Market Challenges
Tesla encountered several challenges overseas, including a year-long investigation by the European Commission into subsidies for China-made EVs, which resulted in a 7.8% tariff on Tesla cars exported from its Shanghai plant.
This contributed to the first yearly decline in deliveries from the factory, Tesla’s most productive site.
Global competition also escalated.
BYD, Tesla's closest competitor, saw a 12.1% rise in EV sales, delivering 1.76 million vehicles worldwide.
BYD’s passenger vehicle sales jumped 41% to 4.25 million units, with overseas shipments increasing 71.9% to over 417,000 vehicles.
However, BYD faced setbacks too, including missing its export target due to a 17% EU tariff and ongoing investigations into labor conditions at its Brazilian factory construction site.
Tesla’s Strategic Changes
Facing declining global deliveries and heightened competition, Tesla made strategic adjustments, such as reducing its workforce and offering financial incentives to attract Chinese buyers.
The company offered a 10,000-yuan ($1,370) discount on loans for its Model Y and introduced zero-interest financing for select Model 3 and Model Y vehicles through January.
Despite these initiatives, Tesla's global sales fell 1.1% year-on-year to 1.79 million vehicles, barely maintaining its lead over BYD.
CEO Elon Musk's earlier forecast of slight global growth did not materialize as Tesla grappled with a global EV market slowdown and pricing pressures.
The Wider EV Landscape
China’s leading role in the EV sector continues to influence global trends.
Industry data shows China was the only major market to record significant growth in 2024, while other regions experienced declining demand.
BYD and Tesla remain leaders in this competitive landscape, leveraging aggressive pricing and scaling strategies to maintain market share.
As Tesla heads into 2025, the company confronts the dual task of sustaining its momentum in China while managing regulatory, competitive, and market challenges in other regions.
The ongoing price war in China and the evolving global EV landscape will test the resilience of Tesla and its competitors in the coming years.
China, Tesla's second-largest market, was responsible for 36.7% of its total sales last year, highlighting the nation’s importance in the global electric vehicle (EV) sector.
China’s EV Market Fuels Tesla Growth
In December alone, Tesla's sales in China jumped 12.8% month-on-month to 83,000 units, setting a monthly record.
However, annual deliveries from Tesla's Shanghai plant, including both domestic and export sales, fell by 3.3% to around 260,000 units.
Export numbers decreased by 24%, affected by reduced European subsidies, a shift in U.S. demand towards hybrid vehicles, and intense competition from Chinese EV makers like BYD.
John Zeng, head of market forecasting at GlobalData, accredited Tesla's strong performance in China to the country's dominance in the global EV market.
China accounted for 70% of global EV and hybrid sales during the first 11 months of 2024 and contributed to over 90% of the global increase in EV and hybrid sales compared to 2023.
International Market Challenges
Tesla encountered several challenges overseas, including a year-long investigation by the European Commission into subsidies for China-made EVs, which resulted in a 7.8% tariff on Tesla cars exported from its Shanghai plant.
This contributed to the first yearly decline in deliveries from the factory, Tesla’s most productive site.
Global competition also escalated.
BYD, Tesla's closest competitor, saw a 12.1% rise in EV sales, delivering 1.76 million vehicles worldwide.
BYD’s passenger vehicle sales jumped 41% to 4.25 million units, with overseas shipments increasing 71.9% to over 417,000 vehicles.
However, BYD faced setbacks too, including missing its export target due to a 17% EU tariff and ongoing investigations into labor conditions at its Brazilian factory construction site.
Tesla’s Strategic Changes
Facing declining global deliveries and heightened competition, Tesla made strategic adjustments, such as reducing its workforce and offering financial incentives to attract Chinese buyers.
The company offered a 10,000-yuan ($1,370) discount on loans for its Model Y and introduced zero-interest financing for select Model 3 and Model Y vehicles through January.
Despite these initiatives, Tesla's global sales fell 1.1% year-on-year to 1.79 million vehicles, barely maintaining its lead over BYD.
CEO Elon Musk's earlier forecast of slight global growth did not materialize as Tesla grappled with a global EV market slowdown and pricing pressures.
The Wider EV Landscape
China’s leading role in the EV sector continues to influence global trends.
Industry data shows China was the only major market to record significant growth in 2024, while other regions experienced declining demand.
BYD and Tesla remain leaders in this competitive landscape, leveraging aggressive pricing and scaling strategies to maintain market share.
As Tesla heads into 2025, the company confronts the dual task of sustaining its momentum in China while managing regulatory, competitive, and market challenges in other regions.
The ongoing price war in China and the evolving global EV landscape will test the resilience of Tesla and its competitors in the coming years.
