Tesla yanks cars from China, slashes Cybertruck price in U.S.—what’s driving the EV giant’s global reset?

Tesla Inc. is contending with renewed trade pressures and shifting consumer sentiment that are reshaping its product strategy across key global markets. In the wake of China’s newly imposed 125% tariffs on U.S.-made vehicles, the electric vehicle manufacturer has withdrawn its higher-end Model S and Model X from its Chinese ordering system. Simultaneously, Tesla has introduced a stripped-down, more affordable Cybertruck variant for U.S. buyers in a bid to counter softening demand for its most-hyped vehicle in years. These dual developments mark a pivotal recalibration of Tesla’s global EV strategy under founder and CEO Elon Musk, as the company navigates volatile geopolitical conditions and evolving market dynamics.

Why did Tesla suspend Model S and Model X orders in China?

Tesla has removed the option to order the Model S and Model X—both built at its Fremont, California facility—from its China-facing website and official WeChat account. This strategic pause comes after China increased tariffs on American electric vehicles to 125%, up from an already steep 84%. The change effectively renders the imported vehicles uncompetitive from a pricing perspective, given that the levies more than double the retail cost of these premium EVs.

Although these models represent a small slice of Tesla’s China sales—just 1,553 Model X and 311 Model S vehicles were sold in 2024—their withdrawal signals the intensifying impact of escalating trade barriers. The move also underscores Tesla’s challenges in navigating a hostile tariff environment amid rising protectionism and a fragile bilateral trade framework between the U.S. and China.

Historically, Tesla has relied on its Shanghai Gigafactory to produce and supply more affordable and mass-market models like the Model 3 and Model Y. Those models remain available and continue to make up the lion’s share of Tesla’s sales in China. Yet the company’s decision to halt new Model S and X imports highlights the vulnerability of U.S.-based production in the world’s largest EV market.

How are Tesla’s sales faring in China amid economic uncertainty?

Despite the refreshed Model Y launch boosting March deliveries, Tesla’s total first-quarter retail sales in China rose only 1.7% year over year, according to data from the China Passenger Car Association (CPCA). That growth pales in comparison to previous years and represents a 31.6% sequential drop from the fourth quarter of 2024, when Tesla sold over 197,000 units.

The underwhelming performance in the first quarter suggests Tesla is struggling to maintain momentum in China’s increasingly competitive EV sector. Domestic rivals like BYD Company Limited, XPeng Inc., and NIO Inc. have expanded aggressively with locally built offerings tailored to consumer expectations and government incentives. This has created a tougher landscape for Tesla, especially as national policy in China begins to tilt in favor of homegrown champions.

Tesla’s retreat from selling Fremont-built models also coincides with ongoing geopolitical friction between Beijing and Washington. The Biden and Trump administrations alike have hardened positions on industrial policy, making cross-border electric vehicle trade increasingly fraught. For Tesla, this means a need to reorient supply chains and product portfolios in a way that limits exposure to geopolitical flashpoints.

Why did Tesla launch a cheaper Cybertruck trim in the U.S.?

On the domestic front, Tesla has introduced a new Long-Range Rear-Wheel Drive (RWD) version of the Cybertruck, priced at $69,990. This represents a $10,000 discount from the All-Wheel Drive (AWD) variant, which was previously the entry-level option. The reduced pricing reflects a shift in Tesla’s approach to sustaining interest in the futuristic pickup, which has seen a cooling in consumer enthusiasm following its highly publicized launch.

The Long-Range Cybertruck variant sacrifices several features in exchange for affordability. It swaps the dual-motor AWD setup for a single rear-drive motor and has a lower towing capacity of 7,500 pounds compared to the AWD’s 11,000 pounds. It also loses premium features such as adaptive air suspension, a rear-seat touchscreen, and additional power outlets. Inside the cabin, cloth seats replace the previously touted “tactical” leather materials. Its 0–60 mph acceleration time slows to 6.2 seconds from the AWD’s 4.1 seconds.

This scaled-down configuration targets a different segment of the market—one that prioritizes price and range over luxury finishes and raw performance. Tesla estimates the variant will deliver 350 miles of range, which can increase to 362 miles with the optional $750 tonneau cover. These specifications position the model to compete more directly with Ford’s F-150 Lightning and Rivian’s R1T base trims.

How are Cybertruck sales performing in the current EV market?

Tesla’s effort to broaden the Cybertruck’s appeal comes as the model struggles to live up to initial expectations. In the first quarter of 2025, Tesla delivered just 6,406 Cybertrucks, a sharp decline from the 12,991 units delivered in the final quarter of 2024, per data from Cox Automotive. This drop occurred even as U.S. electric vehicle sales as a whole rose by 10% in the first quarter.

The sharp decline suggests the Cybertruck is underperforming relative to its lofty projections. Tesla had previously touted over one million preorders for the truck, yet delivery volumes have consistently fallen short of market expectations. Inventory build-up at Tesla’s Gigafactory in Austin, Texas has led to shift reductions and additional cost-cutting measures, including price reductions and equipment downgrades.

In addition to demand issues, Cybertruck quality concerns have surfaced. A spate of recalls, including one involving trim pieces detaching due to faulty adhesives, has dented consumer confidence. The recalls add to concerns that Tesla’s rapid vehicle development timeline may be compromising long-term durability, especially for flagship models like the Cybertruck.

What role is Elon Musk playing in Tesla’s political and public perception?

Tesla’s operational adjustments are unfolding in parallel with heightened political scrutiny and CEO Elon Musk’s increasingly polarising public persona. Musk has drawn attention for aligning himself closely with U.S. President Donald Trump and for endorsing the Department of Government Efficiency (DOGE), a controversial agency formed during Trump’s administration. While this alliance may secure favourable regulatory outcomes in the U.S., it risks alienating consumers and investors abroad, particularly in Europe and Asia where political views often diverge sharply from those in Washington.

This alignment may also influence Tesla’s standing with trade regulators and financial markets. With tariffs playing a significant role in Tesla’s global strategy, Musk’s political connections could prove to be both an asset and a liability, depending on the evolving political climate. The CEO’s influence over Tesla’s strategy, branding, and investor communications remains unrivaled, and any perceived instability in that leadership can have ripple effects on stock performance and market confidence.

How is Tesla’s stock responding to these shifts?

Tesla stock slipped slightly following the removal of U.S.-made Model S and Model X vehicles from the Chinese market, trading 0.4% lower in early sessions on April 11. However, the stock remained roughly 5% higher for the week due to broader market volatility and investor speculation about Tesla’s strategic reorientation. Year to date, however, Tesla shares are down more than 38%, underperforming both the broader S&P 500 and the Nasdaq 100.

Investor sentiment appears split between optimism about Tesla’s product flexibility and concern about its slowing growth and operational challenges. The cheaper Cybertruck variant is being viewed by some analysts as a smart tactical move to defend market share. However, recurring quality issues and inconsistent delivery performance are tempering bullish sentiment.

Experts say the real test for Tesla will come in the second quarter, as it tries to stabilize Cybertruck output, regain momentum in China, and weather ongoing regulatory risks. Analysts at Wedbush Securities note that the next few months will be pivotal for Musk and Tesla’s leadership team to execute a more disciplined product and pricing roadmap.

Tesla’s latest maneuvers—pulling high-end vehicles from the Chinese market and repositioning the Cybertruck for broader U.S. appeal—illustrate the delicate balancing act the automaker must perform in an era defined by economic uncertainty, trade wars, and shifting consumer preferences. As Tesla contends with geopolitical roadblocks and demand challenges, its ability to pivot swiftly and maintain product relevance will determine how it sustains its leadership in the electric vehicle market.