Tesla’s China-Made EV Sales Rise In June 2025, Breaking 8-Month Decline Amid BYD Rivalry

In a notable shift, Tesla‘s China-made electric vehicle (EV) sales climbed 0.8% year-over-year in June 2025, reaching 71,599 units and halting an eight-month downward trend, according to Reuters. Despite this uptick, fierce competition from Chinese rivals like BYD, whose global sales soared 11% to 377,628 vehicles last month, continues to challenge Tesla’s foothold in the world’s largest EV market.

Sales Rebound Signals Resilience

Tesla’s Shanghai factory, producing Model 3 and Model Y vehicles, saw deliveries rise 16.1% from May 2025, including both domestic sales and exports to Europe and other regions. This marks the first year-over-year increase since September 2024, reflecting Tesla’s efforts to stabilize demand.

“Deliveries of Model 3 and Model Y vehicles made in its Shanghai factory, including both China sales and exports to Europe and other markets, were up 16.1% from May,” reported Qiaoyi Li, Zhang Yan, and Brenda Goh for Reuters.

The uptick follows Tesla’s strategic moves, such as offering smart assisted driving capability transfers and joining a government-backed rural EV sales campaign.

Competitive Pressure from BYD Intensifies

China’s EV market remains a battleground, with BYD’s lower-cost models driving its dominance. BYD’s 11% sales growth in June underscores its edge, fueled by an expansive lineup and aggressive pricing.

Tesla, focusing on premium models like the Model Y (starting at approximately $33,500) and Model 3, faces challenges from competitors offering high-performance EVs at lower prices, such as BYD’s Song Plus, retailing around $21,000.

This price gap, combined with BYD’s inclusion of advanced driver-assistance systems like God’s Eye at no extra cost, pressures Tesla to innovate or adjust pricing to maintain market share.

Technical and Operational Dynamics

Tesla’s Shanghai plant, a cornerstone of its global production, supports both domestic and export markets, with a capacity to produce over 950,000 vehicles annually. The recent sales increase aligns with the delivery of an updated Model Y, launched in China in late February 2025, which boosted demand.

However, Tesla’s reliance on a limited model range contrasts with Chinese rivals’ rapid model rollouts. For instance, Xiaomi‘s YU7 SUV, priced at $35,396—about 4% below the Model Y—has gained traction, highlighting the need for Tesla to diversify its offerings or enhance features like its Full Self-Driving (FSD) system, which costs nearly $9,000 in China.

Economic and Regulatory Context

China’s EV market, supported by government subsidies and charging infrastructure, drives fierce competition. A prolonged price war, initiated in 2023, has drawn over 40 brands, squeezing margins. Tesla’s decision to raise the Model 3 long-range variant’s price by 3.6% to $37,500, while extending its range to 468 miles (753 kilometers), aims to balance profitability with demand.

Meanwhile, regulatory shifts, such as the extension of new energy vehicle (NEV) purchase tax breaks until 2027, continue to fuel EV adoption, benefiting both Tesla and its rivals.

Outlook for Tesla in China

Tesla’s June sales rebound signals resilience, but sustaining growth requires addressing competitive pressures. With BYD projected to capture 20% of global EV sales in 2025 compared to Tesla’s 13%, per Counterpoint Research, Tesla must leverage its technological strengths, like FSD, and consider more affordable models. For EV owners and enthusiasts, this rivalry promises innovation and potentially lower prices, but Tesla’s ability to adapt will determine its long-term success in China’s dynamic market.

Photos credit EVXL