4 reasons why Elon Musk should worry about Tesla in China

• 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.