On September 2, according to the official WeChat account of the China Passenger Car Association (CPCA), Tesla (TSLA.US) reported wholesale sales of 83,192 vehicles in China in August, down 4% year-on-year. Compared with 67,886 units in July, sales increased by 22.6% month-on-month. It is worth noting that amid intensifying competition in China’s new energy vehicle (NEV) market, Tesla’s market share has continued to shrink. For reference, Tesla China’s cumulative sales in the first half of the year totaled 263,400 units, a 5.4% decrease compared with the same period last year.
The most direct impact of declining sales is falling revenue and profit. According to Tesla’s latest quarterly report, its total operating revenue in the first half of 2024 was USD 41.8 billion, down 11% year-on-year. Net profit for the same period was USD 2.327 billion, a 30% decline compared with USD 3.348 billion in the same period last year. In Q2 alone, net profit was USD 1.172 billion, down 20.7% year-on-year. Tesla attributed the revenue decline mainly to U.S. tariff policies and an unstable macroeconomic environment.
China remains one of Tesla’s most important markets. However, fierce competition from domestic automakers has made Tesla vehicles no longer the only premium EV choice. To boost sales, Tesla China has introduced several policies in recent months. On April 22, Tesla launched a 5-year zero-interest financing plan and limited-time insurance subsidies for Model Y and Model 3. On July 1, Tesla upgraded the long-range versions of the Model 3 and Model Y, raising their prices by CNY 10,000 (approx. USD 1,400). Additionally, before July 31, buyers of the Model 3 were eligible for multiple incentives, including an insurance subsidy of CNY 8,000 (USD 1,120), 5-year zero interest, CNY 8,000 paint option credit, and special charging benefits. Model Y buyers enjoyed similar incentives. These measures contributed significantly to Tesla China’s August sales rebound.
On August 19, Tesla China launched the Model Y L, a large six-seat SUV designed specifically for the Chinese market. The new model improves comfort and features a larger battery pack, upgraded from 78.4 kWh to 82 kWh, delivering a range of 751 km (CLTC). On September 1, Tesla China lowered the price of the Model 3 Long Range RWD from CNY 269,500 (USD 37,700) by CNY 10,000 (USD 1,400) to CNY 259,500 (USD 36,300). With the launch of the Model Y L and price cuts for the Model 3 Long Range RWD, Tesla’s September sales are also expected to rise.
It is worth noting that Tesla’s slowdown is not limited to China. Its European market performance has also weakened. Data shows that between January and July 2024, Tesla’s cumulative sales in Europe were 119,000 units, down 33.6% year-on-year. To stimulate demand, Tesla announced it would launch a new Model Y Performance version in Europe in September, reportedly priced at EUR 62,990, while the entry-level RWD Model Y will be priced from EUR 45,990. In the U.S. — Tesla’s home market — sales also fell. In the first half of 2024, Tesla sold 271,600 vehicles in the U.S., down 11% year-on-year.
Tesla’s steep sales decline in Europe has been partly linked to CEO Elon Musk’s political stance. In China, the sales drop is largely attributed to local automakers rapidly launching lower-priced models, intensifying competition. Meanwhile, Tesla’s relatively slow product update cycle has caused it to lose market share. According to Tesla’s previous plans, a lower-cost model is expected to launch this year, aimed at expanding its market reach. Whether this new affordable model can help Tesla China regain its sales peak remains to be seen.
