Top executives respond urgently to the "de-Chinaization" claim. Will Tesla decline to a second- or third-tier brand?
Tesla seems to have reached a critical crossroads and been forced to make a "wrong" choice.
In the Chinese market, Tesla is surrounded on all fronts by domestic automakers. Its market share is continuously declining, and the growth rate of its automotive sales revenue has also significantly slowed down. Companies like Xiaomi, NIO, and XPeng all want to step on Tesla to achieve a sharp increase in sales and even turn a profit in the fourth quarter.
However, in such a situation, Tesla officially notified its global suppliers in November that within the next two years, all automotive parts supplied to its US factories must completely exclude Chinese products.
Image/Tesla's "de - Sinicization" Source/Screenshot from the Internet and New Energy Outlook
Tesla's strategic inclination towards "de - Sinicization" has pushed itself into the spotlight of public opinion, indirectly distancing itself from Chinese consumers and affecting their purchasing willingness. In the long run, it may lose the important Chinese market.
This is not what Tesla wants to see. On November 26, Tao Lin, the vice - president of Tesla, quoted the content released by Tesla's official platform half a year ago that "Tesla's localization rate in China has exceeded 95%" and responded that whether in the United States, China, or Europe, Tesla selects suppliers for all its global production bases using the same strict and objective criteria, which are completely based on quality, total cost, technological maturity, and long - term supply continuity. The origin or geographical source of suppliers does not constitute an exclusionary criterion.
Tao Lin's statement is naturally to maintain Tesla's global standards and its image in the Chinese market, while the specific actions of the US factory are more of Tesla's necessary adaptation to local policies.
Under the double - whammy of multiple pressures, what will Tesla's future development look like?
Tesla with a Sharp Decline in Sales
Currently, Tesla's sales in the Chinese market are experiencing a cliff - like decline, and its market performance is worrying.
Data from Dongchedi shows that in October 2025, the combined sales of Tesla Model Y and Model 3 were 26,006 units. This represents a year - on - year decrease of 35.76% and a month - on - month decrease of 63.64%, hitting a new low since November 2022. Among them, Model Y, which had long held the top position in SUV sales, performed particularly poorly. In October 2025, its sales were only 19,500 units, being significantly surpassed by Xiaomi YU7 with 33,700 units.
Image/Tesla's sales in 2025 Source/Screenshot from the Internet and New Energy Outlook
It should be noted that the sales of this model exceeded 51,000 units in September. In just one month, the sales dropped significantly, and the market popularity declined sharply.
The production data also confirms the cooling - off trend of Tesla in the Chinese market. In October 2025, Tesla's production in China was less than 60,000 units. Comparing historical data, from 2022 to 2024, Tesla's production in China in October was 87,700 units, 83,500 units, and 76,600 units respectively, showing a decreasing trend year by year. The production in 2025 was the lowest in the same period in recent years.
Regarding the phenomenon of the simultaneous decline in sales and production, some industry insiders analyzed that there may be two reasons: on the one hand, the overall demand of consumers for Tesla models has weakened, and the market recognition has decreased; on the other hand, the production line adjustment brought about by the model upgrade has affected the normal production and delivery rhythm.
Some relevant people also pointed out that at present, the delivery time on Tesla's official website has been extended from the previous 2 - 4 weeks to the current 4 - 8 weeks. It seems to be a problem of production capacity and delivery caused by the production line adjustment. However, the Tesla Model Y L was launched in August. Theoretically, the production line adjustment should have been completed before August.
Image/Model Y delivery cycle Source/Screenshot from the Internet and New Energy Outlook
In fact, behind Tesla's sharp decline in sales is the short - lived explosion of popularity of new models and the excessive overdraft of production and sales rhythm.
The Tesla Model Y Long Range (Model Y L), which was launched in August 2025, did trigger a frenzy of market pursuit and high attention at the beginning of its launch. At that time, a salesperson at a store said bluntly: "Since its official launch on August 19, the Model Y L has received a warm market response. As of September 3, the total number of orders has reached 120,000, with an average of nearly 10,000 orders per day." At the same time, an insider at Tesla also mentioned that the production capacity of the Model Y L in October had been sold out in advance in September.
Looking back now, the popularity of the Model Y L at the time of its launch may be real, but this popularity lasted for too short a time and quickly subsided. This phenomenon also exposes a key fact: Chinese consumers are no longer as "obsessed" with Tesla as before. They have even gradually changed from the past pursuit to "disenchantment", and the blind worship of the brand has been greatly reduced.
Digging deeper into the reasons for the decline in sales, on the one hand, there are more and more choices in the current Chinese new - energy vehicle market, and consumers have more alternative options with higher cost - performance ratios; on the other hand, and more importantly, Tesla's own product competitiveness is constantly weakening, making it difficult to attract consumers' attention again.
On the Heima Complaint Platform, the number of complaints related to Tesla has approached 4,000. Among them, product quality issues have become the hardest - hit area. Complaints related to product quality such as "What's wrong with the severe discoloration and whitening of the frosted plastic on the rear door of a Tesla I bought just a month ago?", "I bought a Tesla Model Y in September 2023, and the seat cracked while driving, but the claim was rejected.", "There have been many tire problems with my Tesla purchased two years ago, and the warranty department shirks responsibility and no one cares.", "I bought a Tesla Y two months ago and it has traveled 16,000 kilometers. The rear wheels are wearing unevenly. Please recall it quickly!" are not uncommon.
Image/Some Tesla - related complaints on the Heima Complaint Platform Source/Screenshot from the Internet and New Energy Outlook
An automotive after - sales maintenance technician once revealed that among the maintenance cases of multiple automotive brands he has dealt with, the situation of Tesla vehicles "breaking down" is the most common. "That is, when the owner is driving the car normally, the vehicle system suddenly crashes, and they can only contact us to tow the car. Moreover, among many brands, Tesla's towing fee is also one of the relatively high ones."
Has Musk Lost Interest in Car - Making?
The continuous decline in consumers' word - of - mouth towards Tesla has directly affected the sales trend of its models. The most fundamental reason behind this may be that Elon Musk, the helmsman of Tesla, has significantly shifted his strategic focus - the car - making business is gradually losing the tilt of core resources, and instead, there is a strong layout in the AI (Artificial Intelligence) track.
At Tesla's Q3 2025 earnings conference call, Musk said bluntly: "The company is at a 'critical turning point in bringing AI into the real world'. The future strategic core is 'real - world AI' rather than simply the electric vehicle manufacturing business." This statement clearly conveys the change in Tesla's strategic direction.
Currently, Tesla's layout in AI - related fields mainly focuses on three aspects: self - developed AI chips, autonomous driving technology (FSD), and humanoid robot research and development.
According to the latest news disclosed by Tesla recently, its next - generation AI chip, the AI5 chip, is planned to deliver samples in 2026 and achieve large - scale mass production in 2027. This chip is expected to provide a computing power of 2000 - 2500 TOPS. Compared with the HW4 chip installed in current models, the computing power will be increased by about five times, providing stronger technical support for Tesla's AI applications.
Image/Tesla's AI chip Source/Screenshot from the Internet and New Energy Outlook
In the field of autonomous driving, it is reported that currently, the paid usage rate of Tesla's FSD (Full Self - Driving) system has reached 12%. In October 2025, Ashok Elluswamy, the head of Tesla AI, said that Tesla is adopting an "end - to - end" neural network technology, trying to transform the complex matter of autonomous driving into a pure AI technology problem rather than a traditional engineering problem that requires countless engineers to write rules. This adjustment of the technical route has attracted industry attention.
In the field of humanoid robots, Musk has repeatedly emphasized that Tesla's self - developed Optimus humanoid robot aims to achieve an annual production scale of one million units, showing high expectations for this business.
Image/Tesla's Optimus humanoid robot Source/Screenshot from the Internet and New Energy Outlook
In addition, there is another product that Musk often mentions, which is Robotaxi (autonomous taxi). Data shows that as of the end of the third quarter of 2025, the cumulative mileage of Tesla's driver - less Robotaxi fleet deployed in Austin has exceeded 250,000 miles; the cumulative mileage of the Robotaxi fleet with a safety driver deployed in the San Francisco Bay Area has exceeded one million miles, making certain progress in the field of autonomous driving travel.
Image/Robotaxi Source/Screenshot from the Internet and New Energy Outlook
Along with the change in strategic focus, Tesla's R & D investment and profitability have also changed.
Tesla's Q3 2025 financial report shows that the R & D investment in the current period increased by 56.9% year - on - year, reaching $1.63 billion, hitting a new high in the past five quarters. However, at the same time, the company's profitability indicators have deteriorated simultaneously. The gross profit margin decreased from 19.8% in Q3 2024 to 18.0%, and the net profit attributable to common shareholders (GAAP) decreased by 37% year - on - year, dropping to $1.373 billion, showing a significant decline in profitability.
In this regard, Tesla is still in a period of high - speed investment in new business fields such as AI. These new businesses have not only failed to contribute actual revenue but have also brought certain cost pressures and profit burdens to the company, affecting Tesla's overall financial situation.
With the Rise of Domestic Brands, Will Tesla Have an Even Harder Time?
The sales of its core business are declining, and the "new" business is in a "money - burning" stage, but the situation is even more brutal than that. The fact is that whether it is the "old" business of new - energy vehicles or the "new" business, Tesla faces strong competitors in the Chinese market.
First, looking at the automotive business, which is still Tesla's main source of income, in terms of cost - performance, intelligence, or battery life, domestic brands have become more competitive.
The ranking list of China Automotive Technology and Research Center shows that in October 2025, Tesla's sales were more than seven times less than those of BYD, which ranked first. In addition, domestic brands such as Geely, SAIC - GM - Wuling, Chery, and Changan all far exceeded Tesla with sales of over 90,000 units.
The new - energy vehicle startups have also performed strongly. The monthly sales of Leapmotor have exceeded 70,000 units, and both Xiaomi Auto and SERES have sold nearly 50,000 units. It can be seen that Tesla has not only been left behind by traditional domestic brands but is also being quickly overtaken by new - energy vehicle startups.
Image/New - energy vehicle sales in October 2025 Source/Screenshot from the Internet and New Energy Outlook
In October 2025, the penetration rate of new - energy vehicles in the Chinese market reached 57.2%, among which the penetration rate of domestic new - energy vehicles was as high as 77.9%. In such a competitive environment, Tesla is still "living on its past