The fight for EV dominance in China

For the EV market in China, 2024 was a pivotal year not only for homegrown brands and Chinese-made vehicles, but for all brands competing in the market. It was a year in which China became the first country to produce over 10 million “new energy” vehicles; Tesla staged the surprise launch of its newly updated Tesla Model Y; and Xiaomi’s CEO Lei Jun became a livestreaming sensation.

Well into the second month of 2025, it's important to examine the progress made in China regarding electric vehicles and smart driving and observe the trends that will emerge through the Chinese Year of the Snake. This is in addition to the start of Trump’s second term as president of the United States, which leaves the future of global trade and competition in limbo.

 

A battle for the China market

 

In the first month of 2025, two EV-related topics continued to draw attention on Chinese social media: Tesla and Lei Jun, founder and CEO of Xiaomi. The recently launched Model Y from the American EV maker and Lei’s comment on the SUV made it to the Hot Search list on Weibo, China’s equivalent of X. Stores have reported that the new Model Y has received waves of orders even though the displays are not yet on the showroom floor.

Interestingly, Lei’s statement, “Apart from Tesla, all electric-only vehicles are losing money” also reached number 40 on the Hot Search list on Weibo with 6.36 million views.

Tesla and Xiaomi are both tech-centric EV makers, but the resemblance seems to end there. Tesla has been referred to in the West almost exclusively as the brand of its deeply controversial owner, Elon Musk in recent days. However, in China, Tesla remains focused on the merit of its product. On the other hand, while Xiaomi is known for its household appliances and smart home ecosystem in the West, its founder and CEO is as much if not more on the mind of Chinese netizens as the brand itself or its EVs.

With 2.5 million followers in 2024 on Douyin, TikTok’s Chinese sister app, Lei reached number three  on a list ranking ranks accounts which gained the most following on the platform. The only entrepreneur in the Top 50, Lei even beat Walking with Hui, star livestreamer Dong Yuhui’s new channel after leaving Oriental Selection.

The impact of a strong domestic market on EV imports

Lei Jun made the news again on January 21 by simply reposting the December electric vehicle sales ranking, as it shows that the SU7 sedan from Xiaomi had surpassed Tesla’s Model 3, with 25,815 to 21,046 units. Other Chinese EVs are also dominating the Chinese market in other categories or segments, such as Huawei and Seres’s AITO M9, which topped the list of cars priced in the RMB 500,000 ($68,750.26) range with 150,000 units delivered. Conventional luxury car brands are now facing stiff competition in China.

 

 

With China-made cars from domestic and international brands like Seres, Xiaomi and Tesla, imported vehicles saw a huge decline in the past year. In 2024, only 700,000 vehicles, electric or petrol, were imported, dropping 12% year-on-year (YoY), marking the third consecutive year of decline. Meanwhile, sales of vehicles in the EU also saw a 5.9% YoY drop in 2024. This is partly due to Germany and other countries halting the subsidy of EVs in December 2023.

 

 

Li Auto opened its first overseas R&D centre in Munich, Germany, on January 17. Mercedes-Benz Group CEO Ola Källenius’ called for the EU to push for more Chinese EV brands to build manufacturing facilities in the territory and negotiating with Beijing over ending the tariffs on Chinese EVs. These developments provide room for domestic Chinese brands to grow as the home market becomes increasingly crowded.

What’s next for Chinese EVs?

Källenius’ opinion might also stem from concerns over a potential trade dispute between the United States, China and the EU as Donald Trump begins his second term in the White House, with plans on inflict tariffs on German cars and a 10% tariff on Chinese imports.

More than just hardware vehicles, Chinese companies are also growing rapidly in the realm of smart self-driving or assisted-driving systems. The turn of the year saw two Chinese companies successfully going public at the Hong Kong Stock Exchange (HKEX), MINIEYE on December 27 and Saimo on January 15. With Huawei and other tech companies aiming at this battleground, it calls to question how much of a difference Tesla’s Full Self-Drive is going to make when it rolls out in China in the first quarter of 2025.