Tesla Inc. CEO Elon Musk highlighted China’s accelerating transition to electric vehicles, noting that battery-powered and plug-in hybrid cars now dominate new sales. This shift occurs even as major Chinese EV manufacturers face significant stock declines due to intense competition and reduced government support.

Market share shifts to electric

Musk shared data from Nicolas Fulghum, a senior energy analyst at Ember, indicating that conventional internal combustion engine (ICE) vehicles accounted for just 33% of China’s car market in September. Battery-electric vehicles captured 47.3% of the market, while plug-in hybrids added another 19.7%.

Fulghum noted that ICE vehicles’ share has fallen from more than 90% to 33% in just five years. Musk commented on X that "China’s dependency on oil is dropping fast," underscoring the structural change in the world’s largest auto market.

Sector headwinds despite adoption growth

Despite rising EV adoption, Chinese automakers are struggling with reduced government support, excess production capacity, and intensifying price competition. Beijing has begun scaling back subsidies as officials view the industry as more mature. Additionally, the country omitted EVs from its strategic industries list in its latest five-year development plan for the first time in over a decade.

The following table outlines the performance of key Chinese EV stocks over the past 12 months:

Tesla maintains delivery momentum

Tesla delivered 95,366 China-made vehicles in September, up 5% from 90,812 a year earlier, according to the China Passenger Car Association. This increase marked Tesla’s 11th consecutive month of year-over-year growth.

In contrast, major Chinese EV makers reported mixed-to-weak September delivery figures:

• Nio: Deliveries increased 7.7% year over year to 37,408 vehicles, marking its slowest growth rate of the year.
• XPeng: Delivered 41,256 vehicles, down slightly from 41,581 in September last year.
• Li Auto: Deliveries fell to 31,817 from 33,951 a year earlier.

Chinese automakers are increasingly pursuing overseas markets, including Europe, Southeast Asia, and South America, to offset domestic pressures.

What the numbers show

A divergence exists between Tesla’s steady volume growth and the severe valuation compression of its Chinese competitors. While Tesla recorded 5% YoY delivery growth in China, peers like XPeng saw deliveries decline YoY, yet all listed Chinese EV stocks suffered double-digit percentage drops over the last year. This suggests that market sentiment is currently driven more by fears of margin erosion from price wars and policy shifts than by immediate volume metrics alone.

Tesla Inc received a reiterated Sell rating from GLJ Research analyst Gordon L. Johnson, who maintained a price target of $24.86.

The firm’s stance reflects a persistent negative outlook on the electric vehicle manufacturer. The specific valuation implies significant downside from current market levels, though the source does not detail the underlying operational drivers for this assessment.