This article first appeared on GuruFocus.
Recent data from China suggest Tesla (NASDAQ:TSLA) is navigating a more challenging operating backdrop in one of its most important markets. Preliminary figures from the China Passenger Car Association indicate the company shipped 851,732 vehicles from its Shanghai factory in 2025, representing about a 7% decline from the prior year, despite a pickup toward year-end. December shipments reached 97,171 vehicles, marking only the fourth month in 2025 to show year-on-year growth, with the majority of output believed to be absorbed by the domestic market, although export details were not specified.
The softer China performance appears to reflect broader pressures on Tesla’s global business. The company has reported a second consecutive annual decline in overall deliveries and lost its position as the world’s largest electric-vehicle maker to BYD (BYDDF). While third-quarter deliveries benefited from US customers accelerating purchases ahead of changes to subsidy policies, demand momentum has remained uneven as government support is gradually reduced across several regions. At the same time, reports note that consumer sentiment could still be weighing on demand, even after Elon Musk stepped back from a more visible role in politics.
Competitive dynamics in China continue to intensify, particularly as domestic players introduce increasingly technology-focused models. Xiaomi’s YU7 sport utility vehicle has emerged as a close competitor to Tesla’s Model Y, with November sales of 33,591 units compared with 33,935 units for Tesla’s model, according to industry data. Despite these pressures on individual manufacturers, China’s broader new-energy vehicle market continued to expand, with December NEV wholesales rising 4% year on year to 1.57 million units and full-year NEV sales increasing by about 25%, based on Bloomberg calculations using association data.
