Tesla’s China shipments suffer back-to-back drop as rivals gain

The prolonged weakness underscores multiple challenges facing the Elon Musk-led carmaker

Deliveries from Tesla Inc.’s Shanghai factory extended their slump in August as new products launched by Chinese rivals win over customers and global trade uncertainties persist.

The electric vehicle maker shipped 83,192 units from the plant last month, according to preliminary data released by China’s Passenger Car Association on Tuesday, which didn’t break the figures down into exports and domestic sales. That’s down 4% from a year earlier and shipments have dropped in seven out of eight months this year.

The prolonged weakness underscores multiple challenges facing the Elon Musk-led carmaker. China is Tesla’s largest overseas market, but a long-running price war and the popularity of attractively priced, tech-heavy models from local rivals like BYD Co. and Xiaomi Corp. have hammered sales.

Although the Chinese government has urged the industry to rein in its aggressive discounting, there has been limited effect so far and Tesla has sought to claw back ground by upgrading its offerings. It’s introduced a six-seater Model Y, with deliveries anticipated as early as September, and plans to integrate voice controls powered by AI models such as Deepseek that matches its competitors.

The downturn in China adds to a consumer backlash in major Western markets following Musk’s foray into politics and controversial rhetoric. Tesla saw its European sales slump 40% in July, giving it a market share of just 0.8%.

The American carmaker’s difficulties contrast with robust demand for new-energy vehicles in China. In August, the country’s wholesale deliveries of EVs and hybrids grew 24% to 1.3 million units.

That keeps China on track to sell more electrified vehicles than conventional gasoline cars this year for the first time ever.