‘Greatest brand destruction of our times’: Musk’s Tesla China crisis
BYD has Tesla playing catch-up on technology as production and sales fall in the world’s biggest car market. Jessica SierNorth Asia correspondent
Mar 21, 2025 – 2.38pm
Unlike the rest of the world, China’s consumers don’t seem to care about Elon Musk’s controversial politics amid a dramatic backlash against his Tesla electric vehicles.
Tesla sales have tanked in Europe and elsewhere as the chief executive has gone to work dismantling US government agencies with President Donald Trump’s support, attacking political figures across Europe and backing far-right parties.
Chinese consumers care more about price and technology than politics. But this has not helped Musk, whose gamble in the world’s biggest electric vehicle market is now facing its toughest test.
Shipments from Tesla’s giant Shanghai factory, which he opened in 2019, have declined for five consecutive months. The shipments, destined for elsewhere in the country as well as for export, plunged 49 per cent in February from a year earlier to just 30,688 vehicles. It’s the lowest monthly figure since early in the pandemic.
One reason is the company’s updated Model Y sport utility vehicle. Production lines were paused to improve its manufacturing equipment and processes.
“Aside from witnessing the greatest brand destruction of our times thanks to Elon Musk, Tesla is also losing the innovation race.”
— Thomas Rice, Minotaur Capital.
But the company is also struggling to keep up with Chinese rival BYD and a wave of other local EV makers.
Tesla’s troubles have found little sympathy in Beijing. Although Chinese officials have largely stayed silent on Musk’s ultra-close involvement with Trump, one couldn’t help a dig at the billionaire this month.
“As a successful businessman, one should be embracing 100 per cent of the market: treat everyone nicely, and everyone will be nice in return,” Cui Dongshu, chief executive of the China Passenger Car Association, reportedly said.
“But if you look at it in terms of voting, then half of voters will be friendly to you and half of them won’t be. This is the unavoidable risk that’s come after he [Elon Musk] got his personal glory.” BYD soars
Tesla suffered another blow this week when BYD announced a new ultra-fast charging technology, claiming it could provide enough power for 400 kilometres of driving range in just five minutes. BYD’s one-megawatt chargers are twice as powerful as Tesla’s fastest superchargers.
Investors poured into BYD stock, sending it to a record high of $HK399 ($81.50), while Tesla shares continued their fall, dropping 5 per cent.
The plunge capped a torrid few months for the company. People in America have vandalised and set fire to Tesla vehicles, enraged at Musk’s job cuts and efficiency drive for the Department of Government Efficiency. His flirtation with far-right German politics angered consumers in Europe.
Vandalised Teslas in Las Vegas this week.
JPMorgan analysts said they struggled to think of “anything analogous in the history of the automotive industry, in which a brand has lost so much value so quickly” while Morgan Stanley and RBC Capital slashed their stock price targets.
“Aside from witnessing the greatest brand destruction of our times thanks to Elon Musk, Tesla is also losing the innovation race,” said Thomas Rice, portfolio manager at Minotaur Capital in Sydney.
“People buy this stock because they think Tesla will launch a robotaxi business or humanoid robots down the track but faith that these things will happen is diminishing. It’s much easier to expect a Chinese EV company to pull these things off now.” Dwindling performance
Tesla has long traded on its vision for the future, rather than fundamentals. But it’s becoming more difficult for investors to ignore the company’s dwindling performance, particularly in China, once its shining light.
Escalating US-China trade tensions, slowing EV demand globally, and the meteoric rise of domestic competitors have all complicated Musk’s China bet.
Once laughed at by Musk, BYD sold more than 318,000 fully electric and hybrid passenger vehicles in February alone – a 161 per cent year-on-year increase. The Shenzhen-based automaker’s market share in China is heading towards 15 per cent while Tesla languishes below 5 per cent.
While BYD is the clear frontrunner – largely thanks to its battery building business – other Chinese brands are also enjoying solid growth.
In February, Zeekr sold 31,277 electric vehicles, an 86 per cent year-on-year increase. Li Auto delivered 26,263 electric vehicles in February, while premium makers Xpeng and Nio delivered 30,453 and 13,192 cars, respectively.
In an economy hit by a persistent property crisis and depressed consumption, China’s EV makers have competed furiously to keep prices low – a strategy that has eaten Tesla’s market share.
Tesla has maintained premium pricing – the average Model Y still costs around $US33,500 ($53,000) – while BYD has slashed prices between 8 per cent and 18 per cent. Its best-selling Song Plus hatchback now costs around $US21,000, while another popular model, Seagull, retails for just $US9900.
Unlike its Chinese competitors, Tesla is grappling with rules that prevent data from Chinese drivers leaving the country – a critical impediment to training the AI systems that underpin the new software.
Zeekr, Xpeng and GAC all joined BYD this week in offering their own self-driving technology for free – again crimping Tesla’s ability to generate revenue through new features.
Paul Gong, head of China auto-research at UBS, called 2025 the year of “democratisation of high-end autonomous-driving systems” in China, pointing out that Chinese drivers are already trained to expect the best technology in their cars.
Trade tensions between Washington and Beijing could hit Tesla’s Shanghai exports.
Tesla has created relatively self-sufficient supply chains, but the company is still vulnerable to broader market access restrictions or regulatory pressure from China.
Despite the challenges, the Shanghai factory remains Tesla’s largest and most efficient, and China still represented about 21 per cent of Tesla’s total revenues in 2024 – though Morgan Stanley projects this could fall to between 6 per cent and 7 per cent by 2030.
For now, Tesla appears to be pursuing a recalibration strategy. The Model Y refresh, with design elements reminiscent of the Cybertruck, aims to reignite consumer interest.
But the company may also need to revisit its pricing strategy and potentially offer tiered software packages to broaden its appeal.
The company that once pioneered the EV revolution now finds itself in the unfamiliar position of playing catch-up in the world’s most important EV market.
