Tesla falls out of favor with Chinese customers as well, BYD and Xiaomi take the lead

The electric vehicle landscape is going through a rapid transformation, and the once-unquestioned dominance of Tesla is seemingly over for the time being. New data reveals a shift in consumer preference, particularly in the huge Chinese market, where domestic brands BYD and Xiaomi are gaining ground.

A recent UBS survey exposed a telling change in Chinese consumer sentiment. Only 14% of respondents now consider Tesla their top choice for an electric vehicle brand. This figure is a noticeable dip from 18% just a year ago and a far cry from its 30% peak in 2020. In stark contrast, homegrown giants BYD and smartphone-maker-turned-automotive-player Xiaomi are surging in popularity. UBS attributes its rise to "strong product offerings," "technological innovation," and, crucially, "pricing that better matches market expectations."

But this isn't just a localized phenomenon. Globally, the percentage of consumers naming Tesla as their top EV pick has fallen from 22% to 18%. In its home market, in the United States, only 18% of potential EV buyers now see Tesla as their primary choice, down from 22% in 2024. In Europe, Tesla's preference share has dropped to 15%, finding itself overtaken by established German automakers Audi and BMW.

The Canadian market, particularly Quebec, presents an even starker picture for Tesla. Quebec, a leading EV market in North America due to incentives, affordable hydroelectricity, and a dedicated EV enthusiast base, has seen Tesla's sales plummet. Data from the Société d'Assurance Automobile du Quebec (SAAQ) reveals that Tesla delivered only 524 vehicles in Quebec during the first quarter of 2025. This is a staggering 87% drop compared to the same period in 2024.

A pause in EV incentive programs contributed to a broader 45% decline in the Canadian EV market during Q1, but Tesla's significantly sharper drop points to deeper issues. The company has now decided not to import any more vehicles into Canada this quarter due to a lack of demand.

Several factors have converged to create this "perfect storm" for Tesla in Canada. Beyond the incentive pause, the company faced controversy over allegedly filing thousands of questionable requests for incentives amounting to $42 million CAD, which it later described as a backlog.

Adding to the woes, the Canadian government imposed 25% tariffs on Tesla vehicles in April in response to trade disputes, leading to price increases. This combination of factors has effectively eroded Tesla's once-promising market in Quebec.

Meanwhile, Chinese competitors are winning hearts and minds, and they're converting them into sales. Xiaomi saw its SU7 sedan achieve 26,223 unit sales in April alone, outperforming Tesla's Model 3 in China for that month. Their newly unveiled YU7 SUV is positioned directly against Tesla's popular Model Y, promising features like city-level assisted driving and a large infotainment display, all at an anticipated competitive price point.

BYD continues its relentless march, outselling Tesla in Europe for the first time in April 2025. BYD registered 7,231 electric cars in Europe that month, a 169% year-over-year increase, while Tesla's European registrations fell by 49% to 7,165 vehicles. Back in China, during a single week in early May (May 5-11), BYD registered nearly 68,000 vehicles, while Tesla's deliveries dwindled to just 3,070, a 69% drop from the same week the previous year. Tesla's overall China sales also saw a 60% month-over-month decline from March to April, down to 28,731 units.

Local Chinese electric car brands are undercutting Tesla on both features and price. XPeng's Mona 03 offers smart driving features at roughly half the price of a Model 3. Xiaomi and other local manufacturers are now offering vehicles equipped with urban Navigate on Autopilot (NOA) capabilities in the RMB 200,000 (approximately $27,600) price bracket. In contrast, Tesla's Full Self-Driving (FSD) system remains a costly option and has faced challenges in delivering on its promises in the complex Chinese driving environment.

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