Xiaomi YU7 sold out, 3 minutes of listing Dading broke 200,000, Model Y rival Xiaomi YU7 such a result somewhat shocked the car circle, no one could have imagined that the offensive of Xiaomi YU7 was so fierce, and Tesla in the same time and space was gradually falling into the quagmire of sluggish sales, in the face of the “bullets” shot from all directions in the Chinese market, Tesla “increased price” against the wind?
On July 1, according to Tesla China, the Model 3 long-range version and the renewed Model Y long-range version ushered in an upgrade, and the acceleration time of the Model 3 long-range version increased from 4.4 seconds to 3.8 seconds per 100 kilometers, which seems to be equivalent to a free acceleration package worth 14,100 yuan as standard. At the same time, the cruising range under CLTC conditions has been increased from 713km to 753km, and the Model Y long-range version has adopted the strategy of “increasing the amount without increasing the price”, and its cruising range has been increased from 719km to 750km on the basis of maintaining the original price. This adjustment involves not only the improvement of product performance, but also subtle changes in price, and the price of the Model 3 long-range version has been raised by 10,000 yuan.
Tesla’s product upgrade and price adjustment not only reflect its strategic change in the Chinese market, but also reflect Tesla’s current situation in China.
Tesla is losing its “magic”
Tesla’s sales myth is losing its “magic”, according to the data of the Passenger Association, Tesla’s wholesale sales in China are estimated to be 61,700 units in May, down 15% year-on-year, which is the eighth consecutive month of Tesla China’s sales decline. Among them, Tesla’s wholesale sales in China in February were only 30,700 units, a year-on-year plunge of 49.2%.
Tesla’s situation is not limited to the Chinese market, but the world’s major markets are also collapsing. Although the U.S. market is Tesla’s home base, its sales in the first quarter of this year still showed a significant downward trend, with sales falling from 140,200 units in the same period last year to 128,100 units. In the first four months of this year, Tesla’s cumulative sales in Europe also fell sharply by more than 38%, from 101,000 units in the same period last year to 62,000 units.
From 2021 to 2024, Tesla’s sales in China continued to rise. In 2020, with the commissioning of the Shanghai Gigafactory,CapacityAfter being released, Tesla’s sales in China gradually rose and began to emerge in the Chinese market. In the following years, sales continued to grow, and in 2024, Tesla’s sales were 657,000 units, an increase of 8.8% year-on-year, but its market share in China declined slightly.
At the end of December 2024, Tesla reduced the price of the Model Y by 10,000 yuan and extended the five-year 0-interest loan concession. In addition, at the beginning of this year, the Model Y was renewed after 5 years, which boosted the voice to a certain extent, but still failed to bring Tesla back to its former state.
According to data released by the Passenger Branch, Tesla’s wholesale sales in China fell 21.8% year-on-year in the first quarter of this year. Among them, sales in February fell the most year-on-year, and it is reported that it may be related to the transformation of some production lines of Tesla factories in Shanghai, in addition, the launch of the new Model Y has also led to some consumers waiting and waiting to buy, thus affecting the overall sales performance in the first quarter.
In January and February this year, Model Y sales in China plummeted compared with the end of last year, and sales in February did not even exceed 10,000. In March, with the successive deliveries of the refreshed version of the Model Y, sales rebounded to 48,000 units, due to the previous wait-and-see and willingness to buy the new Model Y most of the orders have been consumed in March, and the subsequent sales in April and May have declined. In this way, the market’s feedback on the refreshed Model Y is far from Tesla’s expectations.
In March, Tesla launched a 3-year 0-interest and 5-year low-interest policy for the rear-wheel drive version of the refreshed Model Y, and then covered this strategy to the long-range all-wheel drive version. On April 22, the 3-year 0-interest policy of the renewed Model Y was upgraded to 5-year 0-interest, but judging from the sales in April and May, consumers did not pay for Tesla’s promotional policy, and a consumer who was waiting to buy the renewed Model Y said: It will definitely fall.
In the first quarter of this year, Tesla’s cumulative sales in China were 137,200 units, a year-on-year increase of 3.6%, accounting for 40.75% of global sales.
Compared with Tesla’s decline, China’s local brands are rising collectively, and the two main models of Tesla Model 3 and Model Y have been accurately “encircled and suppressed” by a number of domestic car companies.
In the range of 25-300,000 yuan, Xiaomi SU7, ZEEKR 007 and Xpeng P7 form a “strangulation alliance” to divert potential users of Model 3 with higher configurations and lower prices. When Xiaomi SU7 and Xpeng P7 are equipped with an 800V high-voltage silicon carbide platform to increase charging efficiency to 5C, Model 3 is still stuck in the 400V architecture.
The Model Y is facing strong challenges from new forces such as Xiaomi YU7, Xpeng G7, and Ledao L60, which have more advantages in intelligent and comfortable configuration, taking the Xiaomi YU7 and Xpeng G7 launched this year as an example, which is a two-way attack on Model Y with differentiated advantages.
Xpeng G7 is the core strategic model of Xpeng Motors in 2025, positioned as a medium-sized pure electric SUV, designed for family users, priced at 250,000 levels, with a body size of 4892×1925×1655mm, and a wheelbase of 2890mm, which can be said to be directly aimed at the size of Model Y.
Assisted driving is Xpeng’s “trump card”, Xpeng G7 will be equipped with 3 Turing AI chips, with a total computing power of more than 2200TOPS, using the latest AI Eagle Eye pure visual assisted driving solution, which not only realizes high-speed, urban assisted driving, intelligent parking, etc., and is fully prepared for the future upgrade of L3, in addition, Xpeng G7 is also equipped with an 800V silicon carbide platform to support 5C supercharging technology. It is reported that the Xpeng G7 will be officially launched on July 3, and has opened pre-sale in mid-June, with a pre-sale price starting from 235,800 yuan, and the order volume will exceed 10,000 units within 46 minutes of opening.
Model Y’s other rival, the Xiaomi YU7, has recently been officially launched, and Lei Jun bluntly said at the Xiaomi YU7 press conference that “Model Y is.”New energy vehiclesA masterpiece of the times, the sales are particularly good, it is the object of worship of our whole industry, our car is designed with the dream of surpassing Model Y”, and took the Model Y to the press conference site and Xiaomi YU7 hand-to-hand combat, in the home of Xiaomi YU7, Model Y was undoubtedly defeated, in terms of product strength, in Lei Jun’s previous words, it was “several grades higher”.
Spatially, because of the sports attributes of the Xiaomi YU7, in addition to being slightly smaller than the Model Y in longitudinal space, its length, width and wheelbase are significantly better than the Model Y. In terms of assisted driving, the Xiaomi YU7 is equipped with a Thor chip with a computing power of 700TOPS as standard, 1 lidar, 1 4D millimeter-wave radar, 11 high-definition cameras and 12 ultrasonic radars. And the whole series is equipped with an 800V silicon carbide platform as standard.
Even though the Model 3 and Model Y launched a refreshed version of the model last year and this year, there is neither an 800V high-voltage platform nor an outstanding assisted driving experience, Tesla FSD needs to spend 64,000 yuan to buy separately, and the entry into China is not smooth, there are still problems such as misjudgment of signal lights, wrong road marking recognition, mistaken entry into bus lanes, poor performance in complex road conditions, etc., and there is still a gap between the assisted driving ability and the first echelon of domestic production. Especially in terms of comfort configuration, Tesla’s minimalist “rough house” has been crushed by a number of domestic car companies.
In terms of brand power, each company also has its own strengths, Tesla has a first-mover advantage and Musk’s personal IP influence, Xpeng has made achievements in intelligence and has formed a competitive advantage, and Xiaomi is based on the rice noodle base transformed from the era of electronic consumption and the moat of “people-car-home” intelligent interconnection to enter the market quickly.
In addition, the slowdown in sales is also reflected in Tesla’s stock market, which has been cut in half since its stock price high in December 2024. If sales cannot rebound effectively, its future road may be more difficult.
The double dilemma of product strength and strategy
The reason why Tesla’s sales myth has fallen from the altar is externally because of the “encirclement and suppression” of China’s rivals, but the most essential reason is internal. In the ever-changing auto market, Tesla’s passenger car products and strategic layout seem to be stagnant.
The Model 3 was unveiled in 2016 and the Model Y came out in 2019, two models that defined the era, and their core design language still dominates the product image five years later. Although there were updates during this period, most of them focused on software upgrades, minor interior adjustments or powertrain optimizations, and did not touch on the vehicle’s infrastructure and overall aesthetic innovation.
In contrast, Chinese car companies generally follow the rhythm of “one year of small facelift and three years of major replacement”. Taking the core competitors of Model 3 and Model Y as examples, whether it is the Xpeng P7 series, BYD Han family, or NIO ET5 series, they have all completed a comprehensive upgrade from exterior and interior, intelligent cockpit to electronic and electrical architecture in a similar cycle. Especially in the field of intelligent driving, the iteration speed of the assisted driving system of Chinese brand models is much faster than Tesla’s performance in the Chinese market. While Tesla’s FSD faltered in China, Chinese car companies have rapidly popularized and continuously optimized functions such as high-speed NOA and urban navigation.
Image source: Tesla China
At the beginning of 2025, the Model Y will finally usher in a “refreshed version”, bringing a through-type front and rear light cluster, a larger 15.4-inch central control screen, and a new 8-inch rear control screen.
A Tesla salesperson privately revealed: “The customer churn rate in the showroom is 40% higher than last year, and many customers look back at Y after watching domestic competitors and feel that Y’s performance is mediocre.” Some relevant industry analysts also said that “Tesla is difficult to keep up with the pace of China’s domestic competitors, and its product portfolio is limited and aging”, which intuitively reflects Tesla’s lag in the pace of product updates.
Tesla’s proud FSD fully autonomous driving system has a bumpy journey into China. The core obstacle lies in China’s strict data security regulations, which require that driving data collected in China must not be transmitted overseas, which directly cuts off the critical path for FSD systems to use China’s massive real road data for model training and optimization. Therefore, the FSD system has long faced the dilemma of “acclimatization” in China, and there are still problems such as misjudgment of signal lights, wrong recognition of road markings, mistaken entry into bus lanes, and poor performance in complex Chinese road conditions.
Data compliance issues are still an insurmountable gap for Tesla to promote high-end autonomous driving in the Chinese market. In response to this problem, Tesla reached an in-depth cooperation with Baidu in March 2025, and according to relevant news, Baidu Maps team engineers have settled in Tesla’s Beijing office and are committed to data compliance solutions and localization adaptation. However, the effectiveness of the collaboration will still take time to verify. In February 2025, Tesla has pushed a new version of FSD to some Chinese users, but compared with the latest version in the US market, the Chinese version of FSD is still limited to the L2 level of assisted driving in terms of functions, and the functions are limited to automatic recognition of traffic lights, steering and other aspects. In June last year, He Xiaopeng test-drove FSD in his own country, saying that the FSD performed very smoothly throughout the whole process, and most of the road conditions were very reassuring.
On the one hand, the FSD entry function has “shrunk”, and on the other hand, the assisted driving capabilities of local Chinese car companies have improved by leaps and bounds. Xpeng XNGP system has claimed to achieve urban pilot assisted driving that is “easy to use all over the country”, and BYD has greatly diluted the cost of high-end intelligent driving functions through the “Eye of the Gods” system and delegated it to 100,000 yuan models; Hua Yu Chengdong even publicly stated thatHuaweiAssisted driving technology is better than Tesla FSD even without lidar.
Another point is crucial, in the field of passenger cars, Tesla not only has the existing models updated and iterated slowly, but also has no license to play for a long time, and Tesla’s swaying and delays in the strategy of affordable electric vehicles are particularly costly.
As early as the “Battery Day” event in September 2020, Musk first proposed to build a “national electric vehicle” priced at about $25,000 (about 180,000 yuan) – the project later known as Model 2, aiming to seize the largest market gap of 10-200,000 yuan.
However, the Model 2 project had an ill-fated fate and repeatedly bounced tickets, and in early 2024, Musk made a key decision to cancel the Model 2 project and shift the company’s strategic focus to artificial intelligence, betting on Tesla’s future on Robotaxi and humanoid robots. According to relevant information, at the executive meeting held at the Palo Alto headquarters at the end of February 2024, there was a heated debate over the fate of the Model 2. A number of core executives advocate that Model 2 should be promoted in parallel with Robotaxi, believing that Model 2 can provide Tesla with crucial stable cash flow and effectively hedge against the possible high risks and high losses of the Robotaxi project, and the two can share production lines. But Musk ultimately vetoed the proposal, determined to fully bet on AI transformation, positioning Tesla as an artificial intelligence technology company.
This decision directly led to the departure of at least three pro-Model 2 executives, including Rohan Patel, vice president of public policy and business development, within six weeks of the resolution. Patel has publicly questioned: “Our model shows that FSD and Robotaxi have long and difficult payback cycles, especially in overseas markets, where regulatory hurdles are very large. Musk, on the other hand, firmly believes that Robotaxi has disruptive potential and said that Robotaxi will sell millions of units a year.
In April this year, there was new news about Tesla’s economy models, according to Tesla’s first quarter 2025 financial report, Tesla’s revenue fell 9% year-on-year, and reiterated that new model plans, including economy models, are advancing according to the original schedule, and are expected to start production in the first half of 2025. Consumers can afford it.”
The repeated bounces of Tesla’s new models are essentially the result of a fierce confrontation between Musk’s personal fanatical pursuit of AI and the pursuit of realistic commercial interests by the capital team. According to the analysis of people familiar with Musk, his enthusiasm for electric vehicles has faded, believing that the mission of “opening the era of electric vehicles” has been completed, and the subsequent car development is a “daily operation”.
When Tesla hesitated strategically and cheap models were repeatedly delayed, Chinese car companies have launched a fierce battle in the blue ocean market of 10-200,000 yuan. BYD Seagull successfully lowered the high-speed NOA function to the level of 70,000 yuan, and the MONA M03 launched by Xpeng entered the market with urban intelligent driving functions at a price of about 120,000 yuan. Tesla has missed the golden window to conquer the city and consolidate its share in this core price range.
Epilogue:
From the slow iteration of products, to the difficulty of FSD localization, to the wavering launch of cheap models, Tesla’s sales “magic” has encountered unprecedented gravity in the Chinese market. When Musk’s interstellar dreams collide with realistic sales reports, the power structure of the global electric vehicle market is being drastically reconstructed. The speed of technology iteration has become a new competition point, and Chinese brands are planting flags in the territory once monopolized by Tesla with higher configuration, stronger intelligence, and better cost performance. This disruption is far from over, and the reshuffle has just begun.
