Tesla is intensifying its focus on autonomous technology in 2025 as Chinese electric vehicle (EV) manufacturers, particularly Xiaomi and BYD, rapidly gain market share. The competition is especially fierce in the $30,000-$40,000 segment, where Xiaomi's SU7 is setting a new benchmark.
This strategic shift comes as Tesla seeks to maintain its competitive edge. Tesla is gearing up to launch its autonomous robotaxi service in Austin, Texas, in June 2025, starting with a limited fleet of 10 Model Y crossovers. Tesla's robotaxi service will initially operate near its Austin headquarters, using geofencing to restrict vehicles to areas with simpler driving conditions. The company plans to scale gradually, starting with 10 vehicles for a week, then increasing to 20, 30, and 40.
Morgan Stanley projects Xiaomi's EV business could generate RMB 233 billion (approximately $32 billion USD) in revenue by 2027. Tesla's strategic pivot towards autonomy, including robo-taxis and logistics, aims to create a defensible growth engine amidst increasing competition. Meanwhile, BYD registered 55,100 vehicles during the second week of May, solidifying its position in the Chinese EV market.