Tesla (TSLA) sales decline in China despite Model Y refresh and record discounts

Tesla (TSLA) sales declined quarter-over-quarter in China despite the Model Y refresh being available and offering record discounts. It goes directly against what the automaker claimed after the first quarter.

After Tesla’s poor delivery performance in Q1, the company blamed the Model Y design changeover for limiting production and availability of its best-selling vehicle.

The company reported a 13% drop in deliveries compared to Q1 2025.

Despite Tesla ramping up production of the Model Y to normal levels in Q2, the company experienced an even worse delivery performance, with global deliveries down 13.5% last quarter.

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Tesla is notoriously he most opaque automaker in the world when it comes to breaking down sales per model and market, making it hard to track the health of its vehicle programs in different markets.

However, registration data provides a much clearer picture, and this picture contradicts Tesla’s claim.

In Q2, all variants of the new Model Y became available in China, the world’s largest automotive market, and Tesla still delivered fewer vehicles than in the first quarter.

The China Passenger Car Association (CPCA) released the data today, confirming that Tesla delivered 128,803 vehicles in China during Q2 2025.

That’s down 4.3% compared to the 134,607 vehicles delivered in the first quarter. Year-over-year, the decline is even bigger at 11.7% compared to Q2 2024.

The quarter-over-quarter decline occurred despite the broader availability of the new Model Y. Additionally, Tesla was offering record discounts on both the Model 3 and Model Y in China, with 0% financing, equivalent to a $2,000 to $4,000 discount per car, depending on the model and terms.

Electrek’s Take

What’s happening with Tesla in China? I think people should take notice of this.

China is the biggest and most competitive EV market in the world, and Tesla is being rapidly squeezed out of it. The country is famous for welcoming foreign companies attracted by its large and growing market just to be chewed out and replaced by Chinese companies.

I think that’s what is happening in China. We have already seen what a vehicle like the Xiaomi SU7 can do to Tesla’s Model 3 sales in China, and now the same thing is happening with the best-selling Model Y.

The recently launched YU7 and Xpeng G7 are directly targeting the Model Y and they are priced much more aggressively.

Both Xiaomi and Xpeng are quick to ramp up production, and therefore, Tesla could soon feel the impact of the newly launched models, which are believed to have already garnered over 300,000 orders combined.

Tesla is preparing to launch its new stripped-down Model Y to try to keep up, but it’s going to be difficult as the YU7 and G7 have a head start and they are already cheaper than the current Model Y lineup while offering more features.

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