Tesla's biggest rival slashes prices but faces major pushback

Tesla sold a fraction of the EVs this company did last year.

Jun 10, 2025 - 14:38

Tesla's biggest rival slashes prices but faces major pushback

Tesla's (TSLA) nearly $1 trillion market cap easily makes it the most valuable car company in the world.

Despite selling a fraction of the vehicles its more established competitors did, Tesla justifies its valuation by saying its advanced artificial intelligence and in-car tech make it much more than just a car company.

However, while it is focused on being more than just a car company, Tesla's rivals have been eating away at its EV market share.

In the second quarter of last year, Tesla's market share fell below 50% for the first time since 2017 in the U.S. alone, where it sells the majority of its vehicles.

Tesla accounted for 49.7% of EV sales in the period, according to Cox Automotive, a huge dip from the 59.3% market share it held the previous year.

The company's fortune in China is even more dire, since its market share has cratered to 5.1% as of April 2025 from over 20% in 2021.

The biggest reason for this decline in the Far East is the emergence of Chinese EV maker BYD.

BYD sold over 4.2 million EVs in 2024, a record for the company. But BYD has had to pull out all the stops to break through, and now it is getting pushback for some of the tactics it employs to move vehicles.

BYD is engaged in a Chinese price war.
Image source: Laine/Bloomberg via Getty Images

BYD pulls out all the stops to sell cars

China has been actively promoting its EV industry.

The government offers incentives and promotes EVs as the country's wave of the future, and the campaign is working.

In 2024, China sold about 12.87 million passenger electric vehicles, almost half its total car sales.

BYD led the charge but is using its dominant market position to crush rivals.

In late May, BYD launched a new round of price cuts of up to 53,000 yuan (about $7,300) across 22 models.

The move sent shockwaves throughout the industry, as smaller rivals will have trouble keeping up wth the discounts the much-larger BYD can offer. The move was so drastic that the China Association of Automobile Manufacturers (CAAM) and the Ministry of Industry and Information Technology had to issue public warnings about “disorderly price wars.”

BYD controls 32% of China's new energy vehicle market.

Great Wall Motor, one of BYD's domestic rivals, has raised issues about the price war and even reported the company to Chinese regulators in the past for not meeting emission compliance standards.

Great Wall says BYD uses non-pressurised fuel tanks in its Qin plus and Song plus plug-in hybrids, which allows the liquid inside to evaporate more rapidly.

Tesla's grip on the Chinese market is slipping

Tesla has spent years building up its business in China, but with BYD's emergence, the new pricing war and other pressures, those advances are in jeopardy.

The Gigafactory in Shanghai makes Model 3 and Model Y vehicles for China and Europe.

Tesla has been marketing in China using the "made-in-China" mantra, but data shows that production at its China plant is slowing.

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Tesla made 58,459 Model 3 and Model Y vehicles at Gigafactory Shanghai in April, a 6% year-over-year decline. This came as demand also fell, with deliveries also declining in recent weeks.

To fight back, Tesla has been discounting its vehicles in China wth subsidized 0% interest rates and direct discounts.