China’s electric vehicle market is witnessing an intense price war, as local automakers slash prices in a bid to capture market share from Tesla. In June 2025, this fierce competition reached new heights.

Price Cuts Intensify

Leading domestic brands—XPeng, Zeekr, NIO, Li Auto, and especially BYD—rolled out aggressive discounts on their EV models. BYD offered cuts of up to 34%, a move its executive Stella Li later called “unsustainable,” citing the cutthroat “rat-race competition” in China’s EV industry.

June Sales Highlights

• XPeng tripled its June deliveries year-over-year, reaching 34,611 units.

• NIO reached 24,925 deliveries, slightly under target but growing YoY.

• Li Auto hit 36,279, slightly behind last year but in line with guidance.

• Combined deliveries from these three firms: 95,815, rising from 79,651 in June 2024.

• BYD soared to 377,628 deliveries (206,884 BEVs), a 10% increase YoY, outpacing Tesla in volume.

Tesla Under Pressure

Tesla is feeling the heat: deliveries in its Shanghai‑assembled vehicles declined about 8% through May, with June similar. First‑half 2025 registrations in China fell 7–8% YoY. Stock weakness continues, as analysts weigh Tesla’s robotaxi bet and increasing competition.

New Challenger: Xiaomi’s YU7

Xiaomi shook the market with its YU7 electric SUV—over 200,000 orders in the first 3 minutes and 289,000 in its first hour, emerging as a formidable “Model Y contender”. However, customers face delays of 38–60 weeks, triggering complaints after nonrefundable 5,000 yuan deposits.

Implications for the EV Market

• Margin squeeze: aggressive pricing shrinks profits, raising profit sustainability concerns.

• Regulatory Alert: China’s auto body calls for EV pricing control amid rising regulatory concern over steep discounts.

• Global expansion moves: BYD is redoubling investments overseas, especially in Europe.

• Shifting dynamics: Tesla must innovate beyond price—new models and robotaxis—to maintain its edge.