China Saves Tesla in What Has Been a Bad Financial Year for the Company

Tesla’s sales took a hit in 2024, marking the first annual decline in over a decade. The company saw its sales drop globally, except for China, where deliveries increased by 8.8% to reach 657,000 units, Reuters reports.

Even though China remains Tesla’s second-largest market, the growth isn’t as strong as it used to be, especially as Chinese buyers are increasingly turning to local electric vehicle brands rather than foreign ones.

The Chinese market now plays a key role for Tesla, accounting for 36.7% of its global deliveries. However, Tesla’s position in the U.S. isn’t looking great either. Sales there fell compared to 2023, when the company sold around 675,000 cars. The drop wasn’t drastic enough to push China ahead of the U.S., but the gap between the two markets was likely much smaller in 2024 than before.

The year 2024 also saw China strengthen its position as the largest global player in the EV industry. Chinese automakers, particularly BYD, are gaining ground not only within China but also outside its borders.

BYD delivered 4.25 million vehicles, while Tesla managed 1.8 million deliveries, a slight decrease from 2023. This shift marks a growing challenge for Tesla as it faces tough competition from capable local brands.

Tesla struggled particularly in Europe, where its sales dropped by 13.7% through the first 11 months of 2024. The higher influx of quality Chinese and Korean EVs, combined with lower subsidies in Europe, hurt Tesla’s numbers.

In 2023, Tesla had already faced pressure but had managed to deliver 364,000 cars, a 57% increase from the previous year. The numbers for 2024 are expected to fall even further below that.

The growing competition in the U.S. is also an issue. General Motors (GM) has emerged as a serious competitor, becoming the second-best-selling EV brand in the country. GM’s impressive performance, particularly in the latter part of 2024, saw its sales jump 125% from Q3 to Q4. In total, GM sold around 114,000 EVs in the U.S. during 2024, challenging Tesla’s dominance.

Tesla’s much-anticipated Cybertruck was expected to help boost U.S. sales, but its success has been less than stellar. Although the vehicle showed early promise, its popularity waned as the year progressed. Even used Cybertrucks struggled to find buyers toward the end of 2024.

Looking ahead, China could overtake the U.S. as Tesla’s top market if this trend continues. John Zeng, an analyst at GlobalData, pointed out that China remains the only major market with consistent EV growth, unlike the U.S., where hybrid cars are making a comeback.

In China, electric vehicles are becoming more affordable, with models like the BYD Dolphin priced around $14,000, while the same car costs twice that outside China.

The release of an affordable model in the U.S. could help Tesla turn things around. The car, expected mid-year and priced below $30,000 with a $7,500 federal tax credit, could fill the gap in a market hungry for affordable EVs.

However, Tesla faces a new threat from Chinese automakers, who had planned to enter the U.S. but were held back by a 100% import tariff. If the tariff wasn’t in place, these companies might have already begun to take a bite out of Tesla’s market share, which dropped to 48% in 2024.

If Tesla can overcome these challenges, it could reclaim its position, but the road ahead looks tougher than ever.

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