Tesla's dominance in China's electric vehicle market is facing a significant challenge as the Model Y's sales growth slows, while the Model 3's performance weakens further. This shift comes at a time when Tesla's Shanghai plant is increasingly focused on exports, which have surged by an impressive 257.60% year-on-year in June. However, this export success story is not enough to mask the underlying issues within the domestic market.
In June, Tesla delivered 52,920 vehicles in China, a 13.93% year-on-year decline, but an 11.93% increase from May. The Model Y, the star of Tesla's lineup, accounted for 73.04% of these deliveries, with 38,654 units sold. This represents a 13.81% year-on-year drop and a 33.70% month-on-month increase, highlighting the model's resilience despite the broader market slowdown. The Model 3, on the other hand, saw a 14.25% year-on-year decline and a 22.34% month-on-month decrease, with 14,266 units sold, making up 26.96% of the month's deliveries.
The first half of the year paints a clearer picture of the Model Y's and Model 3's performance. The Model Y has delivered 172,513 units, a slight 0.60% year-on-year growth, while the Model 3 has seen a steep 27.72% year-on--year decline, with 66,442 deliveries. This divergence in performance suggests that the Model 3 is under greater pressure in the Chinese market, especially with the launch of new models by domestic rivals.
The Shanghai plant's export performance is a silver lining. In June, it exported 36,171 vehicles, a massive 257.60% year-on-year increase, although down 6.54% from the previous month. Of these exports, 18,371 were Model 3s, a 395.18% year-on-year surge, and 17,800 were Model Ys, up 177.91%. Exports accounted for 40.60% of Tesla China's wholesale sales in June, and the plant has exported a cumulative 228,994 vehicles in the first half of the year, a 126.58% year-on-year rise.
Despite the strong export numbers, Tesla China's overall wholesale sales reached 89,091 units in June, a 24.43% year-on-year growth, marking an 8th consecutive month of year-on-year growth. In the second quarter, wholesale sales totaled 254,551 units, a 32.77% year-on-year increase. The Shanghai plant's exports exceeded its domestic deliveries in a single quarter for the first time, with 128,394 vehicles exported.
However, the persistent weakness in China deliveries remains a concern. In the second quarter, Tesla's deliveries in China fell 2.05% year-on-year, a fifth consecutive quarterly decline, accounting for just 26.28% of its global deliveries. This is the first time the percentage has dropped below 30% since the fourth quarter of 2020. Tesla's global deliveries reached 480,126 vehicles in the second quarter, with growth momentum coming mainly from markets outside China.
The intensifying domestic competition is a significant factor. In June, Leapmotor overtook Tesla China with wholesale sales of 93,376 units, while BYD held the top spot with 397,292 units in passenger new energy vehicle (NEV) wholesale sales. Both Nio and Xpeng also set new monthly delivery records for the year to date in June. BYD sold 557,090 BEVs in the second quarter, about 77,000 units more than Tesla's global deliveries.
In conclusion, while Tesla's Shanghai plant is performing strongly in exports, the domestic market is showing signs of weakness. The Model Y's dominance is being challenged, and the Model 3's performance is under pressure. With increasing competition from domestic rivals, Tesla must adapt its strategy to maintain its market share in China.
