With competitive pressure increasing in the Chinese market, compounded by various unfavorable factors globally, Tesla China announced on March 17 that it will offer a one-month free trial of its full self-driving (FSD) feature. This initiative is viewed as an urgent measure to stimulate sales in the Chinese market and demonstrates Tesla's effort to enhance competitiveness and reverse declining sales.
The implementation of Tesla's FSD feature has progressed slowly in the Chinese market. When compared to advanced driving capabilities offered by local brands such as Xiaomi and Huawei, Tesla's Navigate on Autopilot (NOA) has not yet fully materialized. The optional price for FSD is approximately CNY64,000 (US$8,848.09), which has drawn criticism from consumers. Therefore, this limited-time free trial highlights Tesla's counteraction against competitors.
Tesla's leading position in the Chinese market is under a fierce challenge from domestic brands. Since its launch, the Xiaomi SU7 has rapidly gained traction, thanks to standard high-speed and urban NOA, along with automatic parking capabilities, establishing a strong foothold in the Chinese market.
Furthermore, the Xiaomi SU7 is equipped with an 800V high-voltage platform, while the starting price of the Tesla Model 3 is comparatively higher, and its smart driving features require additional payment, placing it at a competitive disadvantage.
Other Chinese new energy vehicle manufacturers like BYD, Li Auto, and XPeng Motors are enhancing their technological research and development, particularly in smart driving and charging capabilities. Recently, BYD introduced its Megawatt Flash Charger technology, achieving the ability to charge 407km in just five minutes, further widening the gap with Tesla.
Beyond intensified competition in China
In addition to growing competition in the Chinese market, Tesla is confronting challenges globally.
Recently, a Danish pension fund announced it would blacklist Tesla from investments due to reasons including the company's resistance to unions, board independence issues, and Elon Musk's excessive interference in European and American politics.
Musk's political involvement has sparked backlash in the European market, and Tesla's sales in Germany have also seen a significant decline, with deliveries dropping over 70% year over year in the first two months of 2025.
As a result of these adverse market developments, Tesla's market value has decreased by more than US$800 billion since December 2024. JP Morgan also recently lowered its target price for Tesla. The combination of unfavorable sales conditions and corrections in the capital market puts this electric vehicle leader in a precarious situation.
Future outlook remains uncertain
Tesla currently finds itself in a challenging predicament. The highly competitive environment in the Chinese market is gradually eroding its advantages, while political factors and sell-offs by investment institutions in Europe and America make its situation even more difficult. Although the sudden announcement of a free trial for FSD in China may temporarily increase consumer interest, whether it can successfully reverse the downward trend in the market remains to be seen.
As local new energy vehicle companies in China continue to launch more competitive products, Tesla will face increasingly severe market challenges if it cannot accelerate technological innovation and localization efforts.
Article edited by Jerry Chen
