Tesla Faces Mounting Pressure as Market Share Erodes Despite Record China Sales
Tesla's stock rose 3.3% on Monday to $452.37, reversing a seven-session decline. However, the comfort may not last long because the electric
Quick overview
- Tesla's stock rose 3.3% to $452.37, ending a seven-session decline, but faces significant competition in the EV market.
- The company's deliveries in China dropped by 5% in 2025, marking its first decline since operations began in Shanghai.
- Tesla's fourth-quarter vehicle deliveries fell 15.6% year-over-year, contributing to an overall 8.6% drop in global sales for 2025.
- Investors are increasingly focused on Tesla's self-driving and energy storage businesses as car demand declines.
Tesla’s stock rose 3.3% on Monday to $452.37, reversing a seven-session decline. However, the comfort may not last long because the electric car maker is facing its toughest competition since it started selling cars around the world.
In December, the Austin-based business revealed a shocking difference: its Shanghai Gigafactory set a new monthly record for domestic deliveries with 94,000, a 13.4% increase from the previous year. However, Tesla’s overall market position continued to go worse. In 2025, the company’s share of China’s huge EV market dropped to only 4%, down from 16% when the Shanghai facility opened in 2020 and below 7% in 2024.
The rise in China in December was mostly planned, not natural. Mainland purchasers rushed to finish their purchases before the tax break ended on January 1. This changed the government’s 10% purchase tax exemption to a 5% rate. This demand that was based on deadlines hid a worrying trend underneath: Tesla’s full-year sales in China declined by roughly 5% to over 625,000 units, the first drop since the company started operations in Shanghai.
Tesla (TSLA) Stock Technical Picture Shows Fragile Support
From a technical point of view, Tesla’s jump from $443.30 to $457.48 on Monday happened close to the $450 mark, which is a round number that commonly draws in buyers and sellers. But the seven-session losing skid that came before Monday’s rebound shows that selling pressure is still strong and that one day’s rally can’t totally reverse it.
The stock’s rise happened when the Dow Jones achieved a record high, which means that Tesla’s return was largely due to strength in the market as a whole rather than specific events within the company. Traders are now paying attention to the $450 support level. If it breaks below that level, it might lead to more technical selling toward the $400 level.
Tesla’s Fundamental Challenges Mount
Tesla delivered 418,227 vehicles in the fourth quarter, which was 15.6% less than the same time last year and less than what analysts had expected. Deliveries for the whole year of 2025 were 1.63 million units, which is an 8.6% drop worldwide. This is the second year in a row that deliveries have gone down. The end of the $7,500 U.S. government EV tax credit in September has had a big effect on demand in Tesla’s biggest market.
The scenario gets worse with Europe’s vulnerability. UK registrations plummeted 29% in December to 6,323 units and 8.9% for the whole year. In December, registrations in France declined by 66%, in Sweden by 71%, and in the Netherlands by 44% for the whole year. Norway was the only country that saw growth, with an 89% increase.
Chinese companies are taking advantage of Tesla’s weaknesses. BYD sold more than 2 million electric vehicles in 2025, making it the world’s best-selling brand. Xiaomi’s YU7 got 240,000 pre-orders in just 18 hours after it was out. These domestic companies have advanced driver-assistance technologies and prices that are competitive, which hurts Tesla’s high-end image.
Looking Ahead: Earnings and Autonomy
More and more, investors are looking beyond Tesla’s car deliveries to its businesses in self-driving cars and energy storage. The company used 14.2 gigawatt-hours of energy storage in the fourth quarter, and its modest robotaxi test in Austin has sparked new attention ahead of CES this week.
But if demand for cars keeps going down, Tesla may have to choose between lowering prices to keep sales up or keeping profits high. Deutsche Bank says that passenger car sales in China will drop by 5% in 2026. Beijing’s new trade-in benefits of up to 20,000 yuan per vehicle may mostly help domestic competitors.
Investors will want clear answers on Tesla’s pricing strategy, how long its margins will last, and how far it has come in making self-driving cars available to the public beyond trial programs on the company’s earnings call on January 28.
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