Chinese EV makers are outpacing Tesla in one key area

• Tesla is struggling to maintain its lead in the EV industry.

• A report from ITIF found that China is rivaling or beating Tesla when it comes to innovation.

• Tesla has been slow to release new vehicles and update existing models.

Tesla is fighting to keep its EV crown, and Chinese automakers are already challenging Elon Musk's company in one crucial area: Innovation.

Electric car companies in China have been developing new products and technology at a higher rate than US automakers, according to a recent report from the Information Technology & Innovation Foundation. The Washington DC-based think tank found that Chinese EV companies are 30% faster when it comes to developing and releasing new car models than automakers in other regions, including Tesla.

ITIF said Chinese companies, on average, only take about 1.3 years before they update or refresh their EV models, while brands from other countries, including the US, take an average of 4.2 years.

Tesla has faced criticism for its aging lineup of vehicles, and two experts previously told Business Insider the carmaker's unwillingness to regularly refresh its vehicles was turning off buyers.

Additionally, Chinese electric-car companies like BYD are pumping out more new EVs than US automakers, including Tesla, ITIF said. Between 2017 and 2023, China's BYD introduced 19 new vehicles, as compared to Tesla's five models.

"In short, the quality and innovativeness of EVs from leading Chinese manufacturers such as BYD, Li Auto, Xiaomi, and others increasingly rival or exceed offerings from Tesla or BMW," the report said.

The think tank also traced breakthroughs in battery technology, vehicle design, and software offerings, using case studies of Chinese EV companies, focus group interviews with experts, and by assessing scientific articles and patents to determine that Chinese electric-car makers either equaled or outpaced its US and European rivals. The Think Tank warned US carmakers would need to "double down on genuine technological innovation" if they wanted to continue to compete with Chinese companies.

The report points to larger concerns at Tesla. Musk's company has been facing mounting pressure from EV companies in China, including BYD, which has been vying with Tesla for the title of top EV seller.

Tesla's delivery numbers have slumped over the past two quarters, and Reuters reported in May that the carmaker's sales in China had dropped 18% from the previous year.

Some experts attribute Tesla's lackluster sales to its aging lineup of vehicles. Tesla released its first new vehicle in nearly four years when it began deliveries of the Cybertruck in 2023, but the company hasn't updated some of its models in years. Musk has said there aren't any plans to refresh the Model Y, which came out in 2020, and the design of the Model S and Model X haven't been meaningfully updated since 2021. The Model 3 was refreshed earlier this year, but the tweaks were so minor that only an eagle-eyed owner would be able to spot the difference.

As recently as May, Musk spoke out against tariffs on China, but he acknowledged earlier this year that "Chinese car companies are by far the most competitive."

A spokesperson for Tesla did not respond to a request for comment.

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