Tesla's Shanghai factory deliveries drop 15%

Deliveries from Tesla’s Shanghai Gigafactory have decreased for the eighth consecutive month, amid increasing competition from Chinese electric vehicle (EV) manufacturers.

In May, the factory delivered 61,662 Model 3 and Model Y vehicles, marking a 15% decline year-on-year, according to the China Passenger Car Association (CPCA).

Although May deliveries rose by 5.5% from April, total deliveries for the first five months of 2025 fell by 17.6% compared to the same period last year, amounting to 292,875 vehicles.

Tesla’s market share in China has been pressured as local automakers offer more affordable and feature-rich EV models.

🔗 Source: South China Morning Post

🧠 Food for thought

1️⃣ China’s EV market evolved from price-driven competition to technology innovation battleground

The current price gap in China’s EV market reveals how dramatically the competitive landscape has shifted. Chinese automakers offer EVs at significantly lower price points, with Xpeng’s Mona 03 starting at just 119,800 yuan ($16,629) compared to Tesla’s Model 3 at 235,500 yuan 1.

This pricing advantage stems from China’s comprehensive battery supply chain and manufacturing ecosystem, enabling companies to offer affordable models like BYD’s Seagull for approximately $7,750 after discounts 2.

The competition has evolved beyond just price. Chinese consumers increasingly view EVs as “rolling smartphones,” prioritizing digital experiences and tech integration, which has helped domestic brands gain market share against foreign competitors like Tesla 3.

This shift explains why Tesla’s market position has eroded from 16% in 2020 to just 6% in 2023, despite the Model Y maintaining its position as China’s top-selling SUV.

2️⃣ Government policies shaped China’s EV landscape and continue driving its evolution

China’s remarkable EV market growth has been significantly influenced by strategic government interventions. The country’s EV sales surged from 352,000 units in 2016 to the point where NEVs now account for nearly half (47.6%) of all passenger vehicle sales 4.

This transformation was accelerated by substantial government subsidies ranging from $10,000 to $20,000 per vehicle, which enabled manufacturers to scale production rapidly 5.

Recent government initiatives continue this support, with China implementing a trade-in program offering larger subsidies specifically for NEVs to stimulate consumption amid slower economic growth 6.