"People who believe these messages are foolish," and emphasized that "Tesla's Shanghai factory is operating at maximum capacity." These are Musk's remarks in response to Tesla's decline. Nowadays, the former king seems to be facing unprecedented challenges in the Chinese market. Sales have been overtaken by local brands such as BYD, and gross margins have been benchmarked by cross-industry players such as Xiaomi, and Tesla's "halo" in China seems to be gradually fading.

According to the latest data, Tesla's sales and market share in the Chinese market have both seen significant declines. In August this year, Tesla's retail market share in China was only 6.2%, a year-on-year decrease of 2.8 percentage points. Looking back over the past year, Tesla's share of China's electric vehicle market has fallen from 9% to 6.5%, a change that undoubtedly serves as a wake-up call for Tesla. Even more concerning, Tesla's global sales have failed to shake off the downtrend in 2024. In the first quarter, Tesla's global cumulative deliveries declined by 8.53% year-on-year and by a substantial 20.2% quarter-on-quarter, marking the first time in nearly four years that Tesla's quarterly deliveries have declined year-on-year.

Behind Tesla's declining sales lies the practical problem of aging product lines. Currently, Tesla's main volume-driving models are only the Model 3 and Model Y, both of which have been on the market for many years. The Model 3 has been on the market for eight years, while the Model Y has been available for five years. In today's rapidly evolving landscape of new energy vehicle technology, these two models have struggled to maintain their leading positions in terms of price, performance, and range. Meanwhile, domestic new energy vehicle companies have sprung up like mushrooms, continuously launching new products to benchmark Tesla's core models. From size, range to acceleration performance, Chinese automakers have been able to introduce products that surpass Tesla in many ways, posing unprecedented challenges to Tesla's market position.

Faced with declining sales and shrinking market share, Tesla is actively seeking ways to break the deadlock. Recently, rumors have been circulating in the market that Tesla will introduce new models. It is rumored that Tesla plans to deliver two revamped Model Y variants next year, including a Model Y facelift similar to the Model 3 facelift and a 7-seater Model Y. Additionally, there are reports that Tesla will introduce a 6-seater Model Y in China by the end of 2025. Although Tesla officials have denied these rumors, market expectations for new models remain high. After all, for a brand like Tesla, the launch of new products often quickly boosts market confidence and drives sales growth.

In addition to new models, Tesla also plans to introduce a budget model to further expand its market reach. According to Musk, this budget model will be a compact version of the Model Y, with material costs estimated at around $25,000, equivalent to approximately RMB 180,000. This price is undoubtedly attractive to many consumers. However, in the fiercely competitive domestic market, relying solely on "budget" pricing is not the optimal solution for Tesla. To gain an advantage in the price war, Tesla needs to continuously reduce costs while ensuring product quality and performance.

Beyond product-level challenges, Tesla also faces technical competitive pressures. As autonomous driving technology emerges as a key development direction for new energy vehicles, it has gradually become a popular racecourse for automakers to compete in. Tesla's Full Self-Driving (FSD) system has achieved impressive results in the North American market. Facing the rapid rise and layout of domestic automakers in the field of autonomous driving, Tesla has confirmed that FSD will be launched next year, aiming to regain its market-leading position through technological advantages.

Tesla's challenges in China cannot be ignored, and issues such as declining sales, aging product lines, proliferation of competitors, and technological competitive pressures require serious attention from Tesla.