Tesla Is Flailing in China and the Rapid Rise of BYD Is to Blame

It is almost unthinkable, but Tesla, the company that comes to mind when most people think about electric vehicles (EVs), may have had its best days in China, the world’s biggest and most advanced EV market.

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BEIJING —

Billionaire Elon Musk’s automaker has been backsliding in China for the past five consecutive months on a year-on-year basis, according to data from the country’s Passenger Car Association. Tesla’s shipments plunged 49 percent in February from a year earlier to just 30,688 vehicles, the lowest monthly figure since July 2022, when it shipped just 28,217 EVs—and that was in the middle of the Covid-19 pandemic.

Tesla’s factory on the outskirts of Shanghai has had some of its production lines retooled for efficiency and to relaunch the popular Model Y, so it is to be expected that output dropped and will take some time to ramp back up. But even before that, the trend was heading in the wrong direction.

In terms of market share of the top 12 automakers in China by sales for any type of car—electric, hybrid, or otherwise—Tesla is at No. 11 with well under 5 percent.

Then there is BYD. The company, which stopped making cars powered entirely by internal combustion engines in March 2022, has a market share heading towards 15 percent. It sold more than 318,000 fully electric and hybrid passenger vehicles in February, a rise of 161 percent year on year. BYD also notched another record month for overseas sales, which hit 67,025 units.

Its success is a major reason why Tesla is losing.