• Tesla is having a rough year, but the company's Chinese rivals are having a great few months.
• Shares in BYD, Geely, and Xpeng have surged in 2025, even as Tesla's stock price has plunged.
• The strong performance of Tesla's Chinese competitors adds to the challenges Elon Musk faces right now.

It's been a rough year for Tesla — and a very good one for its Chinese rivals.

While Tesla's stock has climbed a little in recent days, it is down 40% since mid-December. By contrast, its Chinese rivals' share prices have surged on the back of booming sales and breakthroughs in autonomous driving and EV charging.

BYD's share price has risen almost 40% so far in 2025 and hit a record high last week after it unveiled new charging tech it says can charge an EV in five minutes.

EV startup Xpeng has seen an 85% rise in its share price in the first three months of the year, while Nio and automotive conglomerate Geely — which owns EV startup Zeekr and others — have also enjoyed double-digit share price rallies.

The stock divergence comes as Tesla faces numerous challenges in China, its second-largest market behind the US.

Once the most innovative player in the world's largest car market, Elon Musk's automaker has lost market share as local rivals have undercut Tesla on price with a wave of affordable EVs and hybrids.

The likes of BYD, Xiaomi, and Xpeng are now eyeing up Tesla's tech crown too, packing their cars with new autonomous driving and AI features and branching out into humanoid robots and flying cars.

As warning lights flash across Elon Musk's EV empire, here are four reasons the billionaire should be most worried about China.

Sales collapse as rivals surge

Tesla has seen sales plunge around the globe this year — but the drop in China comes as its local rivals enjoy a sales boom.

Sales of Teslas manufactured in China dropped nearly 50% in February compared to the previous year, even as BYD saw its own sales rise by 161%.

This week, BYD released its 2024 annual results, revealing that it had surpassed Tesla in overall revenue. It reported revenues of 777 billion yuan, equivalent to around $107 billion at the latest exchange rate. By contrast, Tesla had revenue of $97 billion in 2024.

The 30,688 vehicles Elon Musk's company shipped from its Shanghai plant was the lowest since August 2022, and was only narrowly ahead of rival Xpeng.

Tesla's sales will likely get a boost in the coming months from the rollout of an upgraded version of its best-selling Model Y, with deliveries beginning this month.

But the company still faces a raft of competition from more affordable alternatives such as smartphone-maker Xiaomi's SU7 electric sedan, prices of which start around $6,000 cheaper than Tesla's new Model Y.

Upstaged on autonomous driving

After years of waiting, Tesla owners in China have finally got access to some of the company's 'Full Self-Driving' features.

The company began rolling out limited driver-assist features last month to Chinese users who have paid about $8,800 extra for access.

That sum is only slightly less than the cost of BYD's cheapest car — the $9,500 Seagull EV — and it came after Tesla's Chinese rival announced it would install its own autonomous driving tech on its entire model lineup for free.

BYD's announcement set off a ripple effect across the industry.

Other EV makers, like Xpeng and Zeekr, quickly announced they would include driver-assist features on upcoming models. Zeekr CEO Andy An told CNBC that the EV startup would follow BYD's lead by offering the features at no extra cost.

BYD's charging breakthrough

Weeks after unveiling its "God's Eye" autonomous tech, BYD made headlines around the globe again as it announced a new EV charging system that promised to charge an electric vehicle in five minutes.

The automaker says its new 1,000 kW chargers can add 250 miles of range in five minutes, outstripping Tesla's current superchargers, which can add 200 miles of range in 15 minutes.

The unveiling of BYD's "super e-platform" last Tuesday sent the company's stock surging to a record high, pushing Tesla's share price down on the same day.

Tesla's supercharger network has been crucial to the company's EV expansion, but BYD's announcement suggests the Chinese firm has taken a key technological lead over its rival.

Tesla's China headache goes global

Right now, the pressures Tesla is facing from its Chinese rivals are confined to China — but that may not stay the case for very long.

China's EV makers are increasingly going global as they look to expand beyond the country's hyper-competitive domestic market.

Exports of EVs and hybrids from China hit a record high in January, according to data from the China Association of Automobile Manufacturers, and BYD reported successive record overseas sales in January and February.

While China's EV giants are blocked from competing with Tesla in the US thanks to high tariffs, the likes of BYD, Xpeng, and Zeekr are expanding rapidly in Europe, where Tesla's sales have plummeted in the first few months of the year.

In the UK, which has no tariffs on Chinese EVs, BYD outsold Tesla for the first time in January, and Tesla's sales in Europe were also overtaken by Chinese state-owned manufacturer SAIC Motor.

Competition from Chinese brands is likely to grow, with Xiaomi president William Lu confirming that the company plans to sell EVs globally "within the next few years" earlier this month.

• XPeng's CEO said he is aiming for level three autonomy, likening it to an "iPhone 4 moment" for cars.
• He said that true success would be his parents' generation using self-driving comfortably.
• Despite revenue growth, XPeng remains unprofitable and is aiming to break even this year.

XPeng's CEO said that autonomous driving's "true success" is seeing a wide range of users, including his parents' generation, use such cars comfortably.

"We are actually in a new generation of technology advancement. And I believe that this is going to trigger a wider adoption of smart driving for the whole society," XPeng's CEO, He Xiaopeng, said on Tuesday's earnings call. "All consumers will become more and more interested in understanding what smart driving is."

Xiaopeng said level three autonomy and strong user demand and loyalty would mark an "iPhone 4 moment for AI-defined cars." Level three autonomy refers to the stage of self-driving in which a car can detect its environment and perform most tasks — but it still requires human override for emergencies or unfamiliar situations.

The electric vehicle maker's CEO added that in the second half of this year, his company plans to be the first in China to sell cars with level three self-driving level. He said XPeng and Tesla are the only carmakers worldwide capable of providing a smart driving experience without high-definition maps or light detection.

XPeng's deliveries grew 52% to 91,507 vehicles in the fourth quarter, compared with the same period a year ago. Tesla delivered 495,570 cars during the same period.

XPeng reported 16.11 billion yuan, or $2.23 billion, in fourth-quarter revenue, up 23.4% year-over-year.

The company's recent success has been driven by new model launches, demand for its AI-powered vehicles, aggressive international expansion targets, and focus on the premium EV segment — which Gu defines as cars costing more than $41,000.

Still, the Chinese EV maker has never turned a profit. It reported a loss of 1.33 billion yuan in the fourth quarter.

In November, the company's president, Brian Gu, said the company may reach a break-even point toward the end of 2025. The milestone would make XPeng the first Chinese carmaker to turn profitable based on EV sales. Larger rivals like BYD are profitable but rely on sales of hybrid cars.

Amid raging competition from Chinese carmakers, XPeng has focused on international expansions. In recent months, it launched in the UK, France, Germany, and Italy and said last month that it planned to expand its footprint to more than 60 countries and regions by the end of the year.

On Tuesday, Xiaopeng said he anticipated that the company's international sales will nearly double this year. He added that by 2034, he expects an even split between sales coming from China and sales from overseas markets.

XPeng's stock fell close to 6% in Hong Kong on Wednesday. It is up 91% so far this year.

• Affordable Chinese electric vehicles are flooding into global markets — but not the US.
• Tesla rivals BYD and Xpeng are bringing their ultra-smart EVs to a host of new countries.
• High tariffs have locked them out of the US, meaning American drivers may be cut off from cheap EVs.

Tesla's China headache might be about to become a global one.

Elon Musk's automaker has come under increasing pressure in the world's largest car market from local EV giant BYD and its rivals, who are now competitive with the Model Y manufacturer on both price and technology.

In January, BYD sold nearly double the number of EVs as Tesla, with the US carmaker's sales slumping by 11% from the previous year.

BYD increased the heat last week with its announcement that "God's Eye" self-driving tech would be offered in nearly all its vehicles, including the $9,500 Seagull. Tesla is still waiting for regulatory approval for its rival FSD system in China.

The most concerning thing about BYD's sales for Tesla — and other Western automakers — is where they're coming from.

BYD sold 66,000 vehicles outside China in January, a record figure that suggests the company's efforts to become a global powerhouse are bearing fruit.

The EV maker, which once received backing from Warren Buffett, beat Toyota to become Singapore's top-selling car brand last month, and overtook Tesla's sales in the UK for the first time.

With BYD's affordable electric and hybrid offerings gaining traction overseas, other Chinese EV players are beginning to follow their lead — a move that analysts and industry execs fear could export the so-called "hypercompetition" of China's home market globally.

European offensive

The debut of Chinese EV startup Xpeng in the UK was no ordinary car launch.

Tech executives and delegates from the Chinese embassy swanned through a grand hall within sight of Tower Bridge that was once a historic fish market, munching canapes and mingling around Xpeng's X2 flying car on display alongside its electric sedans and SUVs.

It's a sign of the tech company ethos that Xpeng's executives were keen to highlight as they announced the company's first UK launch: the G6 SUV, priced about £6,000 ($7,500) less than Tesla's Model Y.

The UK is Xpeng's newest market. It has also launched in France, Germany, and Italy in recent months. President Brian Gu said the company plans to expand its presence to more than 60 countries and regions in 2025.

"Our ambition is to be the No. 1 Chinese premium electric vehicle brand overseas," said Gu, adding that he defined "premium" EVs as costing more than $41,000.

For brands like Xpeng, which still records big losses and lags well behind BYD in China's highly competitive EV market, international expansion may be a necessity rather than a luxury.

"The China market is ultra-competitive, so it's going to be really difficult for them to carve out huge market share gains in the short-term because of the price war," Tu Le, managing director of Sino Auto Insights, told Business Insider.

While the UK has not imposed tariffs on Chinese electric vehicles, making it a tempting target for expansion, the European Union followed the US last year in imposing import taxes of up to 35% on EVs made in China.

That has not stopped brands like Nio and Leapmotor, which has a partnership with Jeep-owner Stellantis, from joining BYD and Xpeng in moving into the continent.

Their expansion has put local automakers on notice. Volvo Cars CEO Jim Rowan told BI that he doesn't believe EU tariffs will stop Chinese EV companies from becoming major players in Europe.

The boss of the Swedish carmaker said the influx of Chinese vehicles into Europe, alongside brutal competition in China, will force local automakers to up their game.

"As the non-Chinese brands lose market share in China, they're going to have to find market share somewhere else. That means they're going to become more competitive in their home markets and global markets around the world," Rowan said.

US risks being left behind

One market that China's EV champions are unlikely to target anytime soon is the US, thanks to 100% tariffs on imported Chinese vehicles introduced by the Biden administration.

These import levies mean the US has had to watch as other regions like Europe get access to affordable electric models like the $32,000 BYD Dolphin, and local brands like Renault launch their own mass-market EVs to compete.

The absence of this trend has helped keep US electric vehicle prices high, with customers paying around $8,000 more on average for an EV compared to Europe. This raises fears that US consumers could be cut off from accessing affordable electric models.

"On the current trajectory, the US is going to get cut off. There are 95 countries outside China where you can buy BYD cars, and we can't," said Tu Le.

Legacy US automakers have been slow to shift to electric vehicles, with companies like Ford and General Motors rolling back ambitious EV strategies over the past year.

President Donald Trump has also vowed to remove emissions targets and scrap federal support for electric vehicles, a move that will likely slow the transition to electric vehicles.

Tu Le warned that a lackluster EV industry in the US risked making the American auto industry less globally competitive, hurting the ability of the likes of Ford and General Motors to compete with their Chinese rivals overseas.

"I'm hopeful we can change the culture and bring products to market that are competitive globally, not just in the United States. As things are, it feels like the Detroit two are effectively on their way to becoming single-market companies," he said.

• Porsche and BMW are the latest automakers to report sliding sales in China.
• The rapid rise of domestic EV makers such as BYD has put the squeeze on foreign competitors.
• Volkswagen, Toyota, and Honda have suffered, and GM took a $5 billion hit on its Chinese business.

Porsche and BMW have become the latest European carmakers to report sliding sales in China.

The two German automakers on Monday said their respective sales in the world's largest auto market fell by 28% and 13.4% in 2024 compared with the previous year, with Porsche blaming a "continuing challenging economic situation" in China for the slump.

The hit in China was so large that it caused Porsche's global deliveries to fall by 3% despite growth in every other market.

Porsche and BMW aren't the only automakers that have witnessed alarming plunges in their Chinese sales in recent months.

Volkswagen, Porsche's parent company, posted an 8.3% decline in sales in China, its largest market, in 2024. Mercedes reported a 7% annual decline, while their Japanese rivals Toyota and Honda also suffered sizable declines in deliveries.

Once dominant in China, foreign automakers are being increasingly squeezed by local competitors, with the likes of BYD and Xiaomi offering high-tech electric options at low prices.

Known for affordable EVs such as the $10,000 BYD Seagull and the $30,000 Xiaomi SU7, many of these companies are now expanding into the luxury market, putting them in direct competition with European manufacturers such as Porsche and BMW.

BYD has released several luxury models under its Yangwang line, including the pothole-hopping U9 sports car and the drone-carrying U8 SUV, while Xiaomi launched a $114,000 luxury version of its best-selling SU7 sedan in October.

That has put foreign manufacturers like Porsche and BMW, each of which counted China as its second-largest market in 2023, in a bind. Many are now rolling back their investments in the country and tearing up their strategies as a result.

General Motors said in December it would take a hit of more than $5 billion on its business in China, with the Detroit automaker closing factories and cutting costs at its joint venture with China's SAIC Motor after it lost $347 million in the first nine months of 2024.

Other brands have fostered closer ties with Chinese companies. Volkswagen announced last week it would partner with the electric-vehicle maker Xpeng to build a network of superfast charging stations in China.

Porsche and BMW did not immediately respond to requests for comment.

• Xpeng CEO He Xiaopeng said that competition within the auto sector will be even more heated in 2025.
• He said in an internal letter that the industry will face an "elimination round" from 2025 to 2027.
• The Xpeng founder-CEO said in November that most Chinese carmakers wouldn't survive the next decade.

Competition within the auto industry will become even more cutthroat in the years ahead, Xpeng CEO He Xiaopeng said in a letter to his company's staff last month.

"The period from 2025 to 2027 marks the elimination round in the automotive industry," He wrote in an internal letter obtained by The Wall Street Journal.

"Competition in 2025 will be fiercer than ever," He added.

In 2024, Xpeng delivered 190,068 vehicles, a 34% increase from the 141,601 vehicles delivered in 2023, per a company filing. The company's vice-chairman and president, Brian Gu, said in March that Xpeng is on track to "achieve profitability at some point in 2025."

Tesla, the world's largest EV maker, delivered 1.79 million vehicles in 2024, a 1% decrease from the 1.81 million vehicles delivered in 2023.

Xpeng did not respond to a request for comment from Business Insider.

He made similar statements on the auto industry's outlook last year. In November, the Xpeng founder-CEO said in an interview with Singaporean newspaper The Straits Times that most Chinese carmakers won't survive past the next decade.

"From 300 start-ups, only 100 of them survived. Today, there are fewer than 50 companies that still exist, and only 40 of them are actually selling cars every year," He told the outlet.

"I personally think that there will only be seven major car companies that will exist in the coming 10 years," he added, without specifying who he thought the surviving companies would be.

In March, He told Singaporean broadcaster CNA that the Chinese EV industry will see a "knockout tournament" in the next three to four years, followed by an "all-star competition" in the next seven to eight years.

To be sure, He isn't the only auto executive who expects intense competition in the industry.

In October, Mercedes-Benz CEO Ola Källenius told attendees at the Berlin Global Dialogue conference that Western automakers are fighting an existential battle against their Chinese counterparts.

"It's strange. It's a Darwinistic-like price war, market purification. And many of those players that are around now. Many of those are not going to be around five years from now," Källenius said.

Xpeng Aero HT, the aerospace company under Chinese EV startup Xpeng, unveiled at CES 2025 its “modular flying car,” the Land Aircraft Carrier. It’s essentially an electric minivan with a small folding eVTOL (electric vertical takeoff and landing) vehicle tucked in the back, which can be rolled out and launched into flight.  The company says […]

© 2024 TechCrunch. All rights reserved. For personal use only.

• Tesla annual sales declined for the first time in over a decade.
• The US EV giant sold 1.79 million cars in 2024, a 1% drop from the 1.81 million sold in 2023.
• Tesla is still the world's largest EV maker but Chinese rivals like BYD are closing in on it.

Chinese auto companies like BYD are giving Tesla a run for its money this week.

On Thursday, Tesla announced that it had delivered 1.79 million vehicles last year, a 1% drop from the 1.81 million vehicles it delivered in 2023. This is the first time Tesla's annual sales have declined in over a decade.

Tesla shares fell by as much as 8% on the same day, trading as low as $373.40 before paring losses.

Tesla's Chinese rivals, on the other hand, saw a rise in sales at the end of 2024.

BYD said on Wednesday that it had sold 1.76 million battery electric cars in 2024, a 12% increase from the 1.57 million cars it sold in 2023.

Smaller EV makers like Nio and Xpeng saw similar improvements in their sales figures as well.

Nio said in a statement on Wednesday that it had delivered 221,970 vehicles in 2024, a 38.7% increase from the 160,038 cars it delivered in 2023.

Xpeng delivered 190,068 vehicles last year, a 34% increase from the 141,601 vehicles delivered in 2023, per a filing made on Wednesday.

To be sure, Tesla is still the world's largest EV maker. The company played a pioneering role in popularizing EVs when it first burst into the scene with the Roadster in 2008.

But the Elon Musk-led EV giant had to engage in a price war in the past year to fend off its rivals.

Besides slashing prices for its vehicles in China, Tesla also doled out incentives like three months of free Supercharging and its Full Self Driving (Supervised) beta software to entice US customers.

Back in January 2024, Musk told investors in an earnings call that Chinese automakers are the "most competitive car companies in the world."

"If there are no trade barriers established, they will pretty much demolish most other car companies in the world," Musk said.

Tesla, BYD, Nio, and Xpeng did not respond to requests for comment from Business Insider.

• China's EV companies are turning to hybrids, which are becoming increasingly popular with drivers.
• Tesla rivals such as Zeekr plan to launch their first hybrid models.
• Hybrids could help them avoid European tariffs on Chinese EVs.

China's Tesla rivals have a new trick up their sleeve: hybrids.

China is the world's largest electric vehicle market in terms of sales. But many of its battery-powered pioneers are now turning to hybrids and extended-range vehicles as they vie for a slice of a highly competitive market and expand overseas.

Xpeng, which rivals Tesla in EVs and humanoid robots, recently unveiled its Kunpeng Super Electric System, a new powertrain system that Xpeng says will allow future vehicles to travel 1,400 kilometers (870 miles) without stopping to charge or refuel. It's unclear when it will launch new models with this technology, though its first hybrid model could arrive early next year.

Rival Zeekr also plans to release its first hybrid, an SUV, in the second half of 2025.

There's a reason these companies are abandoning their all-electric strategy: hybrids and extended-range vehicles are becoming increasingly popular in China — and could make it easier for Chinese EV makers to dodge tariffs overseas.

Hybrids are having a moment

BYD, China's largest EV maker, has reported booming growth in recent months, largely due to its hybrid lineup.

Its hybrid sales jumped were almost 70% higher in November compared with the same month last year. BYD says its latest hybrids can go up to 1,250 miles without stopping for gas or charging.

Tu Le, managing director of consultancy Sino Auto Insights, told Business Insider that China was now "well past the first movers" when it comes to battery electric vehicles.

That has led EV companies to increasingly target customers with limited access to charging infrastructure who may be more skeptical of pure battery-powered vehicles. "There's a huge market for those people," Le said.

He added that diversifying into hybrids made financial sense for EV startups still searching for profits, as hybrids and extended-range vehicles are generally cheaper to produce than battery electric equivalents due to their smaller batteries.

Despite delivering record numbers of cars in recent months, Xpeng, Zeekr, and Nio continue to rack up heavy losses amid a bruising price war in China's cut-throat EV market.

Above all, Le said the likes of Xpeng and Zeekr did not want to miss out on the booming popularity of hybrids.

"They've seen the success BYD has had. BYD basically gives you a full menu — they have offerings at $10,000, $15,000, $30,000 on battery electric or hybrid. That's a compelling reason to buy a BYD," he said.

Overseas ambitions

There are other advantages to selling hybrids, especially for Chinese manufacturers with one eye on overseas expansion.

BYD, Xpeng, Nio, and Zeekr are all seeking to grow beyond the pressure cooker of China's brutally competitive EV market by selling new models and setting up factories in foreign markets.

This expansion push has increasingly encountered hurdles as Western nations have imposed trade protections to protect their auto industries from a wave of cheap Chinese EVs.

The European Union followed in the footsteps of the US by finalizing steep tariffs on imported Chinese electric vehicles in October, with some manufacturers facing a maximum tariff of 35.3% on top of an existing 10% levy.

The new EU tariffs, however, do not apply to hybrids, giving China's EV upstarts a crucial opening.

BYD is already looking to take advantage, with president Stella Li telling Autocar the company was planning to launch three hybrid models in Europe next year alongside three battery EVs.

Fellow EV maker Nio, meanwhile, is reportedly developing its first hybrid model exclusively for the overseas market.

Auto experts have said that European tariffs could ultimately boost imports of plug-in hybrids. S&P Global Mobility analyst Ian Fletcher recently wrote that Chinese automakers are likely to replace some pure EVs in Europe with more hybrids and petrol vehicles.

"I think BYD is going to go to town on the lack of a higher tariff on plug-in hybrids in Europe," said Le. "And the Europeans are going to eat up plug-in hybrids, full stop."

BYD, Zeekr, and Nio did not respond to requests for comment from Business Insider.

• China's Tesla rivals are booming, with BYD, Nio, and Zeekr all breaking sales records.
• Despite their success, many Chinese automakers continue to lose money.
• Nio reported a widening net loss in its latest earnings, as the CEO of Xpeng warns many EV firms face a fight to survive.

China's Tesla rivals might be booming, but they're still losing money.

Nio, Zeekr, Xiaomi, and Xpeng have all broken personal sales records in recent months. Xpeng delivered 24,000 vehicles last month, and Xiaomi sold over 100,000 of its SU7 EV this year alone.

However, the booming sales come as many Chinese EV makers continue to report heavy losses, as they grapple with a brutal price war and intense pressure to quickly launch new affordable models amid a crowded field of battery-electric vehicles.

EV startup Nio, known for its battery-swapping stations and run by CEO William Li, sometimes dubbed "the Elon Musk of China," reported widening losses in its Q3 earnings on Wednesday.

The company reported a net loss of 5.06 billion yuan ($700 million), up 11% from the third quarter of 2023.

Shares plunged nearly 7% in the hours after the announcement, despite Nio delivering 61,800 vehicles in the past three months, a new quarterly record for the company.

The company has been hit hard by the price war that has gripped the Chinese market for much of the past year. Nio said vehicle sales had fallen despite record deliveries due to lower average selling prices.

Nio's rivals reported a similar blend of booming deliveries and painfully high losses.

Zeekr delivered a record 55,000 vehicles in the third quarter, up over 50% from last year, while fellow EV startup Xpeng recorded record sales of its electric vehicles in October.

Both companies narrowed their net losses year-over-year, but they remained sizable at 1.81 billion yuan ($250 million) for Xpeng and 1.14 billion yuan ($157 million) for Zeekr, respectively.

Xpeng's shares fell amid concern that the company's upcoming affordable models may dilute selling prices and margins.

Smartphone maker Xiaomi, which has pivoted into EVs and received acclaim from Ford CEO Jim Farley, announced it was upping its sales target for its high-tech SU7 electric vehicle after selling over 100,000 this year.

Despite this, the tech giant continues to lose money on its EV venture.

A fight to survive

Xpeng CEO He Xiaopeng told Singaporean newspaper The Straits Times that the competitive pressure means most Chinese carmakers will not survive the next decade.

"From 300 start-ups, only 100 of them survived. Today, there are fewer than 50 companies that still exist, and only 40 of them are actually selling cars every year," he said.

"I personally think that there will only be seven major car companies that will exist in the coming 10 years," Xiaopeng added.

One company that is not having the same problems is Tesla's nemesis BYD.

The automaker posted bumper revenues in its Q3 earnings last month, outstripping Elon Musk's company in quarterly sales for the first time, and recorded a profit.

BYD's net profit rose 11.5% from the previous quarter to 11.6 billion yuan ($1.6 billion), and it also sold a record number of vehicles in the third quarter. It's its success comes as Tesla's sales in China slip, with the company's October deliveries down 5.3% from the same month last year.

Analysts previously told Business Insider that BYD was reaping the benefits of its strong hybrid lineup and that its manufacturing approach of making almost every component in-house enabled the company to keep costs low.

"BYD's high degree of vertical integration — making rather than buying many key strategic components — means it can control production of batteries and chips and can do so at very low cost," David Bailey, a professor of business economics at the University of Birmingham, told BI.