Tesla Gets More Major Competition in China

Tesla Inc. (NASDAQ: TSLA) was once a market share leader in China, the world’s largest electric vehicle (EV) market by far. In April, its market share dropped to 3.2%, which ranked it eighth among all EV companies in the country. (Another analysis puts it in fifth place.) That figure was down from 4.6% in the same month a year ago. All the EV companies ahead of it in share are Chinese or have Chinese majority owners. Market leader BYD’s share is 29.7%.

Chinese car companies are introducing new EVs at a feverish pace. Some have price points below $10,000. Xiaomi, which is primarily a smartphone maker, just launched the YU7 sport utility vehicle. There were 200,000 orders for the car in the first three minutes it was available.

One sign of how competitive the Chinese market has become is that EVs have not been Xiaomi’s primary business. The company’s shares hit an all-time high after the launch.

Xiaomi will price the YU7 at $35,370, according to the Financial Times. That makes it a direct competitor to Tesla’s Model Y. Chinese companies are aggressively cutting prices to pick up market share. The cuts are so sharp that analysts believe some of the less well-funded companies could disappear.

Tesla’s China problem is only one headache worldwide. European registrations for May dropped 27.9%. Tesla does not release U.S. figures, but it is generally thought its market share dropped below 50% in the first quarter of the year. The market shares of Ford, GM, and Hyundai/Kia are each approaching 10%.

For Tesla’s global sales to be strong, it has to be among the market share leaders in China. That is getting harder and harder to do, based on recent data and new competition.

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