(Bloomberg) — As Tesla Inc. grapples with a global slowdown in EV demand that contributed to its largest-ever quarterly sales miss, Elon Musk’s carmaker is also steadily losing ground in China — the world’s biggest automotive market.

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Confronted with unprecedented local competition amid weakened consumer sentiment in Asia’s largest economy, Tesla’s market share has shrunk from 10.5% in the first quarter of 2023 to around 6.7% for the quarter ended in December, Bloomberg calculations based on data released by the country’s Passenger Car Association show.

While the PCA didn’t provide a monthly breakdown for March of local shipments versus which EVs made in Tesla’s Shanghai factory are for export, the figures for the first two months of 2024 show the US carmaker’s market share for that period was about 6.6% compared to 7.9% the same period a year ago, when Covid restrictions were just lifted.

Tesla’s sales and production are consistently backloaded in China, with the third month of each quarter the strongest for local shipments.

Tesla, which has long labeled itself a transformer in the industry with avant-garde products and cutting-edge technologies, has, in China at least, been too comfortably relying upon two models — the Model 3 sedan and the Model Y sport utility vehicle. Both were first unveiled before 2020 and have only had minor refreshes since. Meantime, a slew of rivals, from BYD Co. to Nio Inc., Xpeng Inc., Li Auto Inc. and now smartphone maker Xiaomi Corp. have unveiled more thrilling line-ups packed with high-tech features.

BYD in particular has a wide spectrum of models from its Seagull hatchback, which features angular styling, a two-tone dashboard shaped like a seagull’s wing and six airbags and retails for under $10,000 right through to its Yangwang U8 plug-in hybrid, a 1,200-horsepower luxury SUV that can float on water and make a 360-degree “tank turn” on the spot.

Read more: BYD Pitches Floating Luxury SUV to Win Over European Buyers

Price cuts used to be another sales booster for Tesla, one the the most successful practitioners of the direct-sales mode, a strategy that allows it to dictate the end price in line with production costs and market demand. However, Chinese automakers have proven to be determined to join the price war, which was kicked off by Tesla in January 2023 and repeated at the start of this year. Many of them actually deepened their price cuts earlier this week, a likely response to Tesla’s pre-announced price hike on Monday.

In addition, as is the case in many places around the world, growth in China’s EV market is slowing. Shipments of new-energy vehicles are projected to increase 25% to 11 million units this year, the PCA has said. While still expanding, that’s down from 36% in 2023 and 96% in 2022.

Tesla was therefore forced to trim production from its Shanghai factory, Bloomberg reported late last month. Tesla shipments from its Shanghai plant, which makes EVs for China as well as for export to other parts of Asia and Europe, recorded a decline in the first two months of 2024 from the same period a year ago while overall passenger vehicle sales in China increased.

The PCA said Tuesday that Tesla delivered an estimated 89,064 vehicles in China in March, up from 60,365 in February — which was the lowest since December 2022 — and broadly in line with 88,869 in March 2023.

Globally, Tesla said it delivered 386,810 vehicles in the first three months of the year, missing Bloomberg’s average estimate by the biggest margin ever in data going back seven years.

“It’s been an epic disaster, not just in terms of the delivery number, but the strategy,” Wedbush Securities Inc. analyst Dan Ives said in an interview with Bloomberg TV on Wednesday in Asia. “This is probably one of the most challenging periods for Musk and Tesla in the last four or five years.”

–With assistance from Linda Lew.

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