Tesla has suspended new orders for its premium Model S and Model X vehicles in China, signalling deepening woes for Elon Musk’s electric vehicle (EV) empire in one of its most critical markets. The move, reported by Bloomberg on Friday (Indian Standard Time), comes as the company faces falling sales, intensifying competition, and escalating trade tensions between the United States and China.
The ‘Order Now’ buttons for the imported Model S and Model X were removed from Tesla’s Chinese website on Friday morning, having been available until the end of March. Likewise, Tesla’s WeChat mini programme no longer allows users to place new orders for the two luxury models, effectively halting any fresh purchases.
Sales slip amid fierce local competition
Tesla’s decision follows a reported 11.5% year-on-year decline in sales for March, according to data cited by CNBC. The automaker sold 78,828 EVs in March — a marked increase from February’s 30,688 units, but still well below last year’s figures for the same period.
In contrast, Chinese electric carmakers are surging ahead. BYD, Tesla’s biggest rival in China, reported sales of 371,419 new energy vehicles in March alone — nearly five times Tesla’s tally. BYD’s offerings, particularly in the battery hybrid segment, have rapidly gained popularity due to competitive pricing and strong government backing.
Tesla’s struggles are not limited to China. In the United States, its sales dropped by 13% — the steepest quarterly decline the firm has seen in three years. Industry analysts believe the downturn has been exacerbated by Musk’s growing political involvement, including his recent appointment as head of the controversial Department of Government Efficiency (DOGE), and his vocal support for President Donald Trump.
US-China tariff tit-for-tat hurts global trade
The timing of Tesla’s China retreat also coincides with an intensification of the US-China trade dispute. President Trump has steadily raised tariffs on Chinese imports, prompting Beijing to strike back with a barrage of retaliatory duties on American goods — including vehicles.
The trade war has reached staggering proportions. Initially, a 20% tariff was imposed by the US, followed by a 34% duty under Trump’s so-called “reciprocal tariff” policy. In return, China slapped its own 34% tariffs on American goods. The back-and-forth has spiralled, with China facing a cumulative 104% US tariff burden by April, while Beijing raised duties on US imports to 84%, prompting another retaliatory hike of 125% from Washington — bringing the total to an eye-watering 145%.
For Tesla, which exports the Model S and Model X to China from its US factories, the cost burden has become increasingly unsustainable. With demand weakening and the final retail price ballooning due to import tariffs, Tesla’s premium models are finding fewer buyers.
Beijing demands ‘mutual respect’
While Chinese officials have reiterated their willingness to engage in dialogue, they insist negotiations must be rooted in “mutual respect and equality.” In a statement issued on Thursday (IST), China’s Ministry of Commerce denounced Washington’s tactics, stating that “pressure, threats, and coercion” are unacceptable.
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Despite the hardening rhetoric, President Trump struck a softer tone on Wednesday (US local time), unexpectedly praising Chinese President Xi Jinping. Calling him “a smart man who loves his country,” Trump added that Xi “knows exactly what needs to be done.” However, the White House was quick to clarify that the pressure campaign on China remains firmly in place.
Tesla’s China outlook uncertain
For now, Tesla has not issued a formal explanation for the decision to suspend Model S and X orders in China. It remains unclear whether the halt is temporary or part of a longer-term strategic withdrawal from the country’s premium EV market segment.
With intensifying local competition, mounting tariff pressure, and Musk’s increasingly politicised profile, Tesla may find its road in China becoming ever more treacherous.
