Tesla's Decline in Shipments to China: Worrying Developments

Decline in Tesla's Shipments in 2025

Tesla's (TSLA) vehicle shipments from its factory in China have declined for the second time in 2025. This indicates that the company, led by Elon Musk, is facing a slowdown in global demand.

Data from the China Passenger Car Association

According to preliminary data from the China Passenger Car Association (CPCA), the Austin-based manufacturer shipped a total of 851,732 vehicles from its Shanghai factory last year. This represents a 7% decline year-on-year. In December 2025, 97,171 vehicles were delivered, marking only the fourth month of year-on-year growth.

Results and Market Impact

While the shipment data does not separate exports from domestic sales, it indicates that the majority of vehicles produced in Shanghai are targeted at the Chinese market. Shipments, which were 710,900 in 2022, peaked at 947,700 in 2023; however, this momentum reversed in the subsequent years. Deliveries in China fell to 916,700 in 2024, and the decline continued in 2025, marking a second consecutive annual decrease.

Tesla's Challenges in Competition

This weakness in China highlights the broader challenges faced by Tesla. While deliveries recovered in the third quarter as U.S. buyers pivoted toward electric vehicles ahead of changes in incentives, this positive momentum has been lost as governments reduced incentives.

BYD's Rise

On the other hand, Chinese competitor BYD Company (BYDDY) became the world's largest seller of fully electric vehicles in a calendar year for the first time in its history. BYD achieved approximately 2.26 million fully electric vehicle sales in 2025, marking a 28% year-on-year increase and nearly matching the volume of plug-in hybrid sales.