China’s Ministry of Industry and Information Technology (MIIT) made a significant announcement on June 3, 2025. They revealed that Tesla’s Model 3 and Model Y vehicles have been included in a government-backed initiative to promote electric vehicle (EV) and hybrid sales in rural areas of China. This marks the debut of Tesla’s vehicles in this campaign, which has been ongoing since at least 2020.
The initiative features a total of 124 EV and hybrid models, all aimed at encouraging sustainable transportation options in less urbanized regions of China. This country is known as the world’s largest auto market, making this campaign a key driver in the push for increased EV adoption. Among the listed vehicles, BYD, a prominent Chinese automaker, continues to dominate with its best-selling models carried over from the previous year’s catalog of 99 vehicles.
China’s focus on expanding EV adoption in rural areas aligns with its broader goals of reducing carbon emissions. By including Tesla in this campaign, the government is providing the American automaker with access to the vast rural market in China. Additionally, Tesla may benefit from potential government subsidies, tax breaks, or other incentives, giving them a competitive edge against local giants like BYD.
Despite this opportunity, Tesla faces stiff competition in the Chinese market, where its sales have seen a decline. In April 2024, Tesla’s China-made EV sales dropped by 6% year-on-year, with a market share of only 6.1% in the new energy vehicle (NEV) market, which encompasses hybrids. In comparison, BYD holds a commanding 32% market share in the same segment.
As Tesla navigates the competitive landscape in China, being included in the government’s campaign for rural EV and hybrid sales presents a new opportunity for the company to expand its reach and compete more effectively in this crucial market segment.