Tesla Was China’s Favorite EV Brand. Now It’s Stuck Playing Catch-up

Summary

WSJ Tech News Briefing: Tesla Was China’s Favorite EV Brand. Now It’s Stuck Playing Catch-up Release Date: July 8, 2025

Introduction In the July 8, 2025 episode of WSJ Tech News Briefing, host Patrick Coffey delves into the shifting landscape of Tesla's position in the Chinese electric vehicle (EV) market and explores the burgeoning field of food delivery robots. The episode provides an in-depth analysis of Tesla's declining market share in China and examines the societal implications of autonomous delivery systems on urban life.

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Tesla's Declining Dominance in China

Rafael Huang, Asia Tech Reporter, provides detailed insights into Tesla's recent challenges in the Chinese market.

• Market Share Reduction

  Tesla's presence in China, once formidable, has seen a significant downturn. Huang reports, “In May, Tesla's sales in China dropped 30% year on year against a 28% overall market rise” (01:15). The company's market share within the new energy vehicle sector plummeted from 11% in early 2021 to a mere 4% by May 2025.

• Rise of Local Competitors

  Local Chinese brands like BYD and Xiaomi have overshadowed Tesla, capitalizing on their deep understanding of the domestic market. Huang notes, “Overshadowed by local competitors like BYD and Xiaomi, revising these slides is vital for Elon Musk and Tesla” (01:20). The decline is particularly concerning as China remains Tesla's second-largest revenue market and its biggest production export hub.

• Strategic Responses and Skepticism

  To counteract the sales dip, Tesla plans to introduce more affordable Model Y variants next year. However, skepticism looms among employees and analysts regarding this strategy. Huang explains, “There is skepticism… they fear that [affordable models] will easily be outmatched again by local competitors unless the price is significantly lower” (02:31).

• Impact of Musk's Political Relations

  The deterioration of Elon Musk's relationship with former President Trump has had reverberating effects in China. Huang observes, “Beijing's… view of Elon Musk as a diablo asset has diminished… leading to them distancing themselves from publicly quoting him” (03:58). This shift reflects China's nuanced approach to foreign investments, balancing admiration for Tesla's success with a growing emphasis on empowering domestic brands.

• Product Innovation Concerns

  A lack of new models and slow product innovation have further eroded Tesla's appeal in China. Consumers perceive Tesla as outdated compared to the rapidly evolving features offered by local brands. Huang cites a consumer’s switch from Tesla to Xiaomi EV due to integrated features like voice assistants connected to smart home devices (04:57). Additionally, concerns raised by Tesla's China staff about aging product lines have been largely ignored by headquarters, exacerbating the company's challenges (05:30).

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The Rise and Challenges of Food Delivery Robots

Heather Haddon explores the integration of robots into the food delivery industry and the mixed reactions they are eliciting from the public.

• Operational Challenges

  While companies like GrubHub advocate for the convenience of delivery robots, these autonomous devices frequently encounter obstacles. Haddon reports issues such as robots getting stuck in snow, flipping over, or being tripped by students (07:13). These malfunctions necessitate human intervention, highlighting the technological and environmental limitations of current models.

• Public Perception and Ethical Concerns

  The presence of food delivery robots has sparked a debate about their impact on human interaction and campus life. Haddon quotes a college student who described the robots as “evidence of the college campus experience barreling towards dystopia” (09:08). The student argued that reliance on robots reduces the need for students to visit cafeterias, thereby diminishing opportunities for social engagement.

• Emotional Attachment to Robots

  Despite technical issues, some individuals express a fondness for these machines. Haddon shares sentiments from an interviewed woman who said, “I know it's technically not a human, but they're cute” (08:27). This emotional attachment is attributed to the robots' anthropomorphic features, though it contrasts with others' fears of a dystopian future where robots replace human roles.

• Industry Optimism and Economic Incentives

  Companies remain optimistic about the future of delivery robots. Haddon notes that GrubHub operates more than 30 campuses with these robots and has expanded to other cities, attracting significant investment, including from tech entrepreneur Sam Altman (09:56). The economic drive to reduce delivery costs in the face of rising labor wages propels continued development and deployment of robotic solutions.

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Conclusion The episode of WSJ Tech News Briefing provides a comprehensive look into Tesla's strategic struggles within the competitive Chinese EV market and the societal implications of integrating robotics into everyday services like food delivery. As Tesla navigates declining sales and intensifying local competition, the broader discourse on technology's role in society continues to evolve, reflecting both optimism for innovation and caution about its impacts.

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Notable Quotes:

• Rafael Huang on Tesla's market share: “In May, Tesla's sales in China dropped 30% year on year against a 28% overall market rise” (01:15).
• Heather Haddon on public perception: “I know it's technically not a human, but they're cute” (08:27).
• Heather Haddon on industry optimism: “The economic incentive is really there because food delivery has always been super expensive to do” (10:38).

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Timestamps:

• 01:15: Rafael Huang discusses Tesla's declining sales in China.
• 02:31: Discussion on Tesla's strategy for more affordable models.
• 03:58: Impact of Musk's fallout with President Trump on Tesla's standing in China.
• 04:57: Chinese consumers' perception of Tesla's product innovation lag.
• 07:13: Introduction to the topic of food delivery robots.
• 08:27: Emotional response to delivery robots.
• 09:08: Student's perspective on robots affecting campus life.
• 09:56: Companies' optimism about the future of delivery robots.
• 10:38: Economic incentives driving the adoption of robotics in food delivery.

Transcript

[Patrick Coffey]

Viking committed to exploring the world in comfort. Journey through the heart of Europe on an elegant Viking longship with thoughtful service, cultural enrichment and all inclusive fares. Discover [e-mail] welcome to Tech News Briefing. It's Tuesday, July 8th. I'm Patrick Coffey for the Wall Street Journal. China spent years cozying up to Elon Musk, but now Tesla's sales there are dropping and Musk's fallout with President Trump has Beijing reconnaissance considering his value as a partner. Plus food delivery robots. Are they cute and convenient or a sign we're barreling toward dystopia? We look at how human robot relations are playing out on city streets and college campuses. But first, for a while, Tesla was the hottest car on Chinese roads and CEO Elon Musk was the toast of Beijing. Now, however, Tesla has started falling behind the local Chinese EV brands that it helped create, even as the Chinese market grows more important for the company. Our Asia tech reporter Rafael Huang wrote about this Rafael how much have Tesla sales slowed in China and what are the most important factors in Musk's plans to reverse that slide?

[Rafael Huang]

At this moment, Tesla's market share has declined significantly recently. In May, Tesla's sales in China dropped 30% year on year against a 28% overall market rise. Its market share is in new energy vehicles, which includes battery EVs and plug in hybrids plummeted from 11% in early 2021 to just 4% in May. Overshadowed by local competitors like BYD and Xiaomi, revising these slides is vital for Elon Musk and Tesla. China is the company's second largest market by revenue after the US and critically is still Tesla's biggest production export hub. So its importance is growing and especially as sales have declines in the US And Europe. And at this point, Eagle Mars primary plans also involve launching a new, more affordable Model Y variants next year. But there is also skepticism from employees and analysts regarding Tesla's strategy of a more affordable model, which remove and downgrade features from existing models because they fear that it will easily be outmatched again by local competitors unless the price significantly lower.

[Patrick Coffey]

Rafael, in your reporting, did you reach out to Tesla for comment?

[Rafael Huang]

Yes, we did reach out to Tesla for comment, but Tesla didn't respond to the request.

[Patrick Coffey]

Let's talk about how Tesla found itself here. You write that Chinese officials said that when Tesla first entered the market, it was like throwing a catfish into a pond full of sluggish fish. Tell us how that played out.

[Rafael Huang]

Initially, Beijing welcomed Tesla as a predatory catfish, which can help in general how and spur competition in the local markets when China's EV industry was still very nascent. But over year it has helped cultivate the whole supply chains and other companies which are now performed very strongly. This pattern equals past experience of many American companies in China, where initial success gives way to local dominance. Some experts we spoke to suggest that Musk might be approaching the sunset of his business in China, potentially looking at other markets like India. So this catfish pattern may play out again in other business that Tesla is banking on for future growth as well, such as mega batteries and humanoid robots.

[Patrick Coffey]

Beijing reconsidered Musk's status as a business partner as his relationship with Trump recently turned sour. How has that affected Tesla's business operations in China?

[Rafael Huang]

Chinese officials maintain the very pragmatic view of Tesla and Elon Musk. Chinese leaders do view Tesla as a poster child for successful foreign investments and have shielded its local operations from broader trade tensions with the U.S. but this view has become more nuanced. Beijing's primary focus now have shifted to empowering domestic champions, while concurrently Elon Musk's political value to Beijing has also diminished after his public failure with President Trump, making Chinese officials now less inclined to view him as a diablo asset and leading to they're distancing themselves from publicly quoting him.

[Patrick Coffey]

One of the more common complaints about Tesla in the US market is a lack of new models, with the theory being that Musk's focus on robots, self driving taxis and more recently politics has slowed the development of a successor to the Model Y. Do we see the same narrative in the Chinese market?

[Rafael Huang]

The lack of new models and slower product innovation has significantly impacted Tesla's standing in the Chinese market as well. Chinese consumers now perceive Tesla as tired and out of touch with local tastes compared with the rapidly evolving feature offerings from domestic brands. For example, we spoke to a consumer who switched from a Tesla to a Xiaomi EV precisely because of the integrated features like a voice assistant connecting to his smart home devices. We have some reporting showing that Tesla's old China staff have repeatedly voiced concerns to headquarters about the company's aging product lines, but these warnings have mostly been met with sluggish responses. Tesla's China staff also repeatedly urged the headquarters to prioritize some of the features like smartphone connectivities and entertainment apps on the car, but US based officials dismiss them as not a priority. So this is really putting Tesla in a difficult position, allowing Chinese automakers to surpass Tesla in delivering a localized modern in car experience that consumers now expect from a cutting edge EV that was.

[Patrick Coffey]

WSJ reporter Rafael Huang. Coming up, you won't earn any merit badges for helping a food delivery robot cross the street, but you might just find yourself doing it anyway. That's after the break.

[Heather Haddon]

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[Patrick Coffey]

The future of food delivery may be scarier for the robots handling this work than for the people they're serving. Thousands of robots that deliver pizza and burgers to people's homes, hotels and dorm rooms are getting stuck in snow piles, flipping on their backs or having drunk college students tripping over them. Sometimes they have to rely on the kindness of human strangers to get back on track. Companies like grubhub insist that customers love the convenience. But one college student recently wrote an op ed describing these delivery bots as evidence of the college campus experience barreling towards dystopia. Our Julia Carpenter spoke with WSJ reporter Heather Haddon about it.

[Julia Carpenter]

You reported some of these robots are foiled by literal bumps in the road. What are some of the challenges that get them off track?

[Heather Haddon]

Yeah, so I do want to say the companies say that they are very accurate and that they are. Most of their deliveries are successful. But of course, in the real world, things happen, Right? And some of what happens is just that people who encounter them want to interact with them in all kinds of ways. So whether it's kids following them around or adults trying to tamper with them in various ways, like sit on them or maybe turn them over or just like step in front of them and see what they do.

[Julia Carpenter]

I really sympathized with the woman you interviewed who said she couldn't help but feel for them. She said, I know it's technically not a human, but they're cute. What is it about these things that engenders those feelings in some of us?

[Heather Haddon]

Well, some of them do have kind of like a face or a look to them. And, you know, on the cute side of the spectrum, it's like, look at this little cute thing moving along in the world, defenseless, maybe trying to do work for us. The not so cute side is people do see it as dystopian or just as a feeling of, you know, this robot maybe is replacing a human, or what does this mean about human connection? Or that there's kind of a darker side to this.

[Rafael Huang]

Yeah.

[Julia Carpenter]

You wrote that one student at Notre Dame is actually calling for a boycott. What inspired him to do that?

[Heather Haddon]

So in 2023, the student newspaper first wrote about these robots with some disdain for them, and then 20 editorial board basically said, we're against these and we think they are not good for campus life. And their main point is that when we have these robots shuttling food, students are home in their dorms, not going to the cafeteria, not interacting with people. So depends who you ask.

[Julia Carpenter]

You mentioned this earlier, but when you spoke to someone from grubhub, they said they have not felt the effects of that boycott and that these robots are getting to their destinations without issue. Are they optimistic about the future of these robots?

[Heather Haddon]

For sure, these companies are optimistic. So GrubHub now works on more than 30 campuses with their robots. And I should say the GrubHub doesn't make the robots. And then one of the companies I talked to, Coco, they've expanded quite a bit and have sites for other cities also and have gotten quite a bit of funding, including from Sam Altman. The economic incentive is really there because food delivery has always been super expensive to do. So they've tried all kinds of things, make it more efficient, like batching orders, but it's just expensive. And, you know, wages are going up sometimes for these workers where there's been mandates to pay them a certain amount. So it does make sense that some would try to solve this problem of cost through robotics.

[Patrick Coffey]

That was our Julia Carpenter speaking with reporter Heather Haddon. And that's it for Tech News Briefing. Before we go, a reminder that we're on a new schedule starting this week. Tech News Briefing will be back on Friday. And in the middle the meantime, we'll have the TNB Tech Minute with the latest tech headlines in the feed each morning and afternoon. Today's show was produced by Julie Chang with Deputy editor Chris Zinsley. I'm Patrick Coffey for the Wall Street Journal. Thanks for listening.