U.S. automaker Tesla hit record sales of electric cars in China last year, even as its annual global deliveries fell for the first time.
Tesla said its sales in China will grow by 8.8% in 2024, reaching a record high of more than 657,000 vehicles.
China remains Tesla's second-largest market after the United States, with the automaker delivering 36.7% of all its vehicles to Chinese customers.
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As sales surge in China, Tesla reported its first annual decline in vehicle deliveries. The Elon Musk-led automaker will sell a total of 1.79 million electric vehicles in 2024, down 1.1% from the previous year.
Musk had earlier predicted a “small increase” in deliveries in 2024 and offered a series of promotions, including interest-free financing and free fast charging, to boost sales.
But declining subsidies in Europe, a shift in U.S. consumer interest toward lower-priced hybrids and tougher competition, especially from China's BYD, have hurt Tesla.
Analysts also pointed out that Tesla's sales decline was due to its aging product lineup.
The decline “underscores that the current vehicle lineup is approaching market saturation,” Morningstar analyst Seth Goldstein said in a note.
The new Cybertruck pickup truck has also added to Tesla's woes, failing to attract customers wary of high borrowing costs.
Tesla's stock price closed down more than 6% on Thursday. It performed strongly in 2024. Trump won the election with strong support from Musk, and Tesla's stock price rose by more than 60%.
China, the outlier of electric vehicles
Experts say that despite Tesla's global sales decline, record sales in China reflect the global electric vehicle landscape.
John Zeng, head of China market forecasting at London-based consultancy GlobalData, said China is the only major market with strong growth, while other markets are slowing down or even declining.
In the first 11 months of 2024, China accounted for 70% of global electric and hybrid vehicle sales.
Meanwhile, China's electric vehicle market, the world's largest, is expected to have another fiercely competitive year in 2025.
Tesla, BYD and two other Chinese electric car makers will continue to implement sales incentives in the country, Brutal and ongoing price war continues for third consecutive year.
The incentives include a 10,000 yuan ($1,369.99) discount on outstanding loans for Tesla's best-selling Model Y cars. The company is also offering zero-interest financing for up to five years on select Model 3 and Model Y vehicles through the end of this month.
BYD is approaching
However, despite these incentives, Tesla will still lose its crown as the world's No. 1 electric car seller to Chinese rival BYD.
Tesla's global sales for the year were 1.79 million vehicles, only slightly ahead of BYD. BYD's global electric vehicle sales increased by 1.21% to 1.76 million vehicles.
Unlike Tesla, BYD exceeded its sales targets in China, with passenger car sales growing 41% last year to more than 4.25 million units.
China's electric car champion leads the cost-cutting race with its Dynasty and Ocean ranges of electric cars and plug-in hybrids.
Lower-priced electric vehicles and hybrid vehicles also drove BYD's overseas shipments to grow by 71.9%, reaching 417,204 vehicles. Accounting for 9.8% of BYD's global sales.
However, the automaker failed to meet its export target of 450,000 units in 2024 as it faces additional tariffs of 17% in the European Union, one of its largest foreign markets.
Nearly a fifth of BYD cars sold in China are in Brazil, where the automaker currently faces investigations On “slavery-like working conditions” and “forced labor” on the construction site of its factory.
The plant, which is currently closed, will be BYD's first outside Asia.
- Vishakha Saxena Additional Editor, Reuters
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