BYD, Xiaomi overtake Tesla as top EV brand choices in China, says UBS

"In China, we see intense competition and Tesla is no longer seen as the technology leader."

In China, Tesla fell to 14 percent as a top EV brand choice, down from 18 percent last year, and now behind both BYD and Xiaomi.

(A Tesla Model 3 on display at the June 2024 Shanghai new energy vehicle show. Image credit: CnEVPost)

Consumer interest in the Tesla (NASDAQ: TSLA) brand is declining globally, and in China it's being overtaken by local brands, according to a UBS survey.

In China, Tesla fell to 14 percent as a top EV brand choice, down from 18 percent last year, and now behind both BYD (HKG: 1211, OTCMKTS: BYDDY) and Xiaomi (HKG: 1810, OTCMKTS: XIACY), UBS analyst Joseph Spak's team said in a research note yesterday.

More broadly, Chinese consumers prefer to buy domestic brands over Tesla, although they do favor Tesla over other foreign brands, the team said.

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"In China, we see intense competition and Tesla is no longer seen as the technology leader," the note read.

For Tesla, China is its second-largest market after the United States.

In the first quarter, Tesla's retail sales in China were 134,607 units, up 1.65 percent year-on-year, but down 31.64 percent from the fourth quarter of 2024, according to data compiled by CnEVPost.

Retail sales in China contributed 40 percent of Tesla's 336,681 global deliveries in the first quarter.

In the January-April period, Tesla's retail sales in China's domestic market were 163,338 units, a decrease of 0.31 percent year-on-year, according to data from the China Passenger Car Association (CPCA).

Tesla's share of China's battery electric vehicle (BEV) market was 7.96 percent in the January-April period, down from 11.44 percent in the same period last year, according to data compiled by CnEVPost.

The UBS research note also highlighted the troubles Tesla is facing in the US and European markets.

"In the US, we see Tesla saturation (~48% US BEV share), a limited vehicle lineup and affordability are concerns," the note reads.

In Europe, Tesla CEO Elon Musk's political involvement may have hurt its brand, UBS said.

Globally, 36 percent of consumers would consider a Tesla, down from 39 percent last year, according to UBS.

As a consumer's top BEV choice, Tesla's share fell to 18 percent from 22 percent last year, the bank said.

In the US, Tesla as a top choice fell to 29 percent from 38 percent last year, and in Europe, it fell to 15 percent from 20 percent last year.

In Europe, Audi and BMW surpassed Tesla in brand consideration, UBS said.

UBS has a Sell rating on Tesla stock and a 12-month price target of $190, which represents a 47.64 percent downside from Tesla's Tuesday close of $362.89.