Growth with many warning signals: Tesla dominates in China

The Chinese car market shows solid growth in March – but behind the shiny numbers there are clear warning signals. Tesla celebrates a comeback with the revised Model Y, which sold 48,098 times and thus became the best-selling single model. Nevertheless, Tesla's total sales in March fell by 11.5% to 78,882 vehicles compared to the previous year, indicating a fragile market balance.

Glitz and Shadow in March

The numbers speak for themselves: Tesla recorded a total of 172,173 vehicles with alternative drives sold in the first quarter of 2025, landing in third place – far behind industry giant BYD, which sold more than 800,000 units. While the car market in China grew by 8.2% overall and private car sales even increased by 10.4%, the commercial vehicle sector, in particular, declined by 2.4%. This mix of growth and decline shows that consumer confidence is slowly increasing but still vulnerable.

Price Reductions as Growth Engine

A significant driver of growth in March was massive price reductions. Electric cars were discounted by an average of 17,600 Yuan, while combustion models were offered an average of 13,200 Yuan cheaper. Especially in the luxury segment, the discounts are enormous, highlighting that the success of vehicles with alternative drives results less from genuine demand and more from aggressive pricing strategies. According to the China Passenger Car Association (CPCA), the stronger price reduction for electric cars is based on the intense competition in this segment, whereas outdated combustion models only try to assert themselves through short-term promotional actions.

Export Market and International Challenges

Exports represent another warning signal: In March, only 507,000 vehicles were exported, representing growth of only 1% compared to the previous year. Since April 2024, monthly exports have consistently hovered around the 500,000 mark – a plateau that is particularly concerning for manufacturers like BYD, who heavily rely on international markets. Protectionist measures in other regions, such as Europe or Russia, could further exacerbate this trend.

Conclusion

The Chinese car market presents a double-edged picture in March: While Tesla scores with an impressive comeback of the Model Y and strong growth in new vehicle sales, overcapacities, aggressive price reductions, and a weakening consumer climate burden the market's foundation. The increasing competition from local brands like BYD and the stagnating export growth underscore the fragile structures of the market. For Western manufacturers, the fight against the dominance of Chinese car brands is tougher than ever, while Tesla provides a shining example of innovation – but is not immune to the challenges of the home market.