Tesla’s China Sales Rise: Why Is the West Still Lagging Behind on EVs?

Key Takeaways

• Tesla’s sales are steadily increasing in China.
• At the same time, Tesla’s market share is decreasing in the US.
• Tesla’s growth in China shows how the West continues to lag behind.

Sales of Tesla’s electric vehicles in China reportedly grew 3% in August from a year earlier; at the same time, the automaker’s share of the US EV market dipped below 50 percent last quarter.

The juxtaposition highlights how the West’s electric vehicle (EV) industry continues to lag behind China’s.

Subsidies and Incentives

The Chinese government has provided substantial subsidies and tax incentives for EV manufacturers and consumers. These have played a crucial role in boosting China’s EV industry, enabling it to outpace other markets.

Direct cash subsidies provided by the government have been one of the primary drivers of this growth. These subsidies lower the upfront cost of electric vehicles and make them more affordable than traditional internal combustion engine vehicles. 

For many years, these subsidies were substantial enough to cover a significant portion of the vehicle’s price , which made EVs an attractive option for consumers.

In the US and the UK, affordability remains one of the main issues keeping people from switching. The average price of a new EV in the US is over $60,000, with a similar price across Europe. 

Julia Martinez, an energy & auto analyst at business intelligence company Morning Consult, wrote in a 2023 report : “While consumers still have plenty of concerns surrounding an EV’s battery range, price remains the higher priority when purchasing an EV.”

Charging Infrastructure

China has rapidly expanded its EV charging infrastructure with extensive networks of public charging stations. In the US, one in five public EV chargers do not work, according to a Harvard Business School  study. 

In June, a Chinese official said that China had built the world’s largest EV charging network . As of the end of May, China had 9.92 million charging stations, marking an increase of 56 percent. 

The Harvard Business School study, which collected data across the US for over a decade, found that US EV public chargers had a reliability score of just 78%. 

Omar Asensio, the study’s lead researcher, said that EV stations were, on average, less reliable than traditional stations.

Asensio found that many EV drivers have “charge anxiety,” a fear of keeping an EV powered and moving due to the lack of reliability with pumps. 

This extends beyond “range anxiety,” which was a term initially touted for the way drivers felt about the lack of charging stations across the US.

Tesla’s US Market Share Falls Below 50% 

In July, The New York Times  reported that Tesla’s US EV market share fell below 50 percent in the previous quarter. It marked the first time the US automaker had dropped below 50 percent since it released its Model S in 2012. 

The fall in market share was likely due to a fall in sales, which saw a dip of 6.3 percent  over the period.

In April, CEO Elon Musk told employees he would be cutting around 10% of Tesla’s workforce.

In line with Tesla’s headcount at the end of 2023, approximately 14,000 people were expected to be affected. In an internal memo, Musk cited cost reductions and role overlapping as the main motivations behind the proposed layoffs.