What's happened
Tesla has introduced a new rental service in California, allowing customers to rent vehicles for 3-7 days with free supercharging and FSD. The move aims to boost sales as US EV demand declines following the expiration of federal tax credits. The program is expected to expand nationwide.
What's behind the headline?
Tesla's rental program signals a strategic shift to combat declining US sales and waning consumer demand. By offering extended test drives with no mileage limits and incentives for purchase, Tesla aims to convert potential buyers who are hesitant due to higher prices and increased competition. This initiative also reflects Tesla's effort to differentiate itself in a saturated market where older models are failing to attract new customers. The move comes as Tesla's market share in the US has dropped significantly, from nearly 80% to 38% over recent years, amid price wars and rising competition from Chinese brands like BYD and Chery. The program's initial rollout in California, a key EV market, suggests Tesla is testing the waters before expanding nationwide. If successful, this could help Tesla stabilize sales and improve brand loyalty, but it also highlights the broader industry struggle to maintain growth without federal incentives. The rental model may also serve as a data collection tool, providing insights into consumer preferences and vehicle performance, which could inform future product development and marketing strategies.
What the papers say
The NY Post reports that Tesla's rental program is a response to declining US sales and increased competition, with a focus on converting hesitant buyers. AP News highlights the broader industry context, noting that Chinese automakers are expanding aggressively into Western markets, especially the UK, where Chinese brands like BYD and Chery are gaining market share. The Guardian provides insight into the global competition, emphasizing China's strategic push into electric vehicles and the impact on traditional automakers. Reuters adds that Tesla's UK registrations have fallen sharply, reflecting the challenges faced in Europe, with older models failing to attract buyers amid new Chinese entrants and supply chain issues. These contrasting perspectives underscore Tesla's strategic efforts to adapt to a rapidly changing global EV landscape.
How we got here
Tesla's new rental initiative follows a period of declining US sales, which fell 24% in the first eight months of 2025. The company faces increased competition from Chinese automakers and legacy brands, alongside a shrinking market share. The program is part of Tesla's strategy to convert hesitant buyers and regain market traction amid broader industry challenges.
Go deeper
Common question
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Why Are Chinese Car Sales Slowing Down in 2025?
China's auto market has experienced rapid growth over the past decade, but recent data shows a slowdown in sales, especially in October 2025. This decline raises questions about the factors behind the slowdown, the impact on domestic automakers, and what it means for the global electric vehicle (EV) market. In this page, we'll explore why Chinese car sales are decreasing, how Chinese automakers are expanding internationally, and what the future holds for this dynamic industry.
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Tesla, Inc. is an American electric vehicle and clean energy company based in Palo Alto, California. The company specializes in electric vehicle manufacturing, battery energy storage from home to grid scale and, through its acquisition of SolarCity, solar
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BYD Auto Co., Ltd. (Chinese: 比亚迪汽车; pinyin: Bǐyàdí Qìchē) is the automotive subsidiary of BYD Company, a publicly listed Chinese multinational manufacturing company. It manufactures passenger battery electric vehicles (BEVs) and plug-in hyb