Tesla's Record Sales in China as Global EV Market Faces Competitive Challenges

U.S. electric vehicle manufacturer Tesla (TSLA) reached record sales in China in 2024 by increasing its sales in the country. Selling over 657,000 vehicles in China, Tesla boosted its sales by 8.8%, showcasing a strong performance in the world's largest automotive market. Tesla China reported that sales increased by 12.8% in December compared to the previous month, reaching 83,000 units. This once again highlights Tesla's success in the Chinese market.

While 36.7% of Tesla's global vehicle deliveries in 2024 were made to customers in China, the company's global sales recorded a decline of 1.1%. CEO Elon Musk's earlier expectations of modest growth did not materialize, as declining subsidies in Europe, the rising popularity of low-cost hybrid vehicles in the U.S., and the increasing competition from China-based BYD emerged as key reasons for this decline.

Challenges in China's EV market Despite Tesla's success in China, challenges persist throughout the industry. According to Nomura analysts, double-digit declines may occur in China's electric vehicle and hybrid car market in January. This situation arises from uncertainties surrounding national subsidy programs. Analysts indicate that if the government does not expand its supportive policies, weak sales momentum may also be seen in the first quarter of 2025.

Nomura emphasizes that competition in the EV market will remain intense, expecting Tesla and other manufacturers to engage in further price reductions and product upgrades to maintain their competitive edge. On the other hand, if the government expands subsidies, this move could serve as a significant short-term catalyst for the entire automotive market.

Tesla's global and Chinese strategy Tesla has solidified its strong position in the world's largest automotive market with record sales in China. However, the decline in deliveries in the global market highlights the challenges posed by increasing competition in the EV sector and decreasing incentives. Nomura's forecasts suggest that, despite short-term challenges in the Chinese market, government policies could help regain momentum. Tesla's performance in this market could play a significant role in shaping the overall direction of the EV sector.