According to analysts, Tesla is on track to have another record quarter for sales in China despite growing pressure from domestic rivals like BYD who are cutting into its market share in the largest car market in the world.

According to projections made by Shi Ji, an analyst with China Merchants Bank International Securities, the American manufacturer might sell 155,000 vehicles in China from April to June, a 13% increase over its first quarter record.

While BYD and Aion, the EV divisions of Guangzhou Automobile Group (601238.SS) that produce battery-operated vehicles, increased their market share, Tesla’s market share in China’s battery-electric vehicle market fell in the quarter to 13.7% from 16% in the first three months, Shi added.

According to Deutsche Bank, Tesla might sell 448,000 units worldwide and 153,000 units in China during the second quarter.

“Tesla has to sell into China’s lower tiered cities to seek further growth, but its direct sales model would be too costly to expand its sales network into hundreds of such cities,” said Yale Zhang, managing director at Shanghai-based consultancy Automotive Foresight.

“BYD, on the other hand, has a big advantage in those markets with dealerships,” he added.

Over the weekend, Tesla will reveal its global sales figures. Association statistics will be accessible in the first week of July for China sales.

After North America, China is Tesla’s second-largest market, and it also houses its biggest manufacturing. To increase sales, it cut the price of its two outdated models at the beginning of the year. This sparked a price war, with rivals like BYD following suit by cutting pricing or introducing new, more affordable versions.

BYD defied the trend and increased its lead with its supply of cars priced under 300,000 yuan ($41,500), while smaller EV manufacturers like Nio and Xpeng struggled as China sales fell in recent months.

As its exports increase, BYD is also catching up to Tesla in areas outside of China. In the first five months, it outsold Tesla in Singapore, and in May, its Atto 3 outsold Tesla’s Model 3 in Australia.

To boost sales, Tesla is preparing updated models of the Model 3 and Model Y. The corporation is also collaborating with Chinese officials to get its cutting-edge autonomous driving software approved so that Chinese drivers can use it.

Tesla is expanding sales of its China-made vehicles into additional markets in the region, including Thailand and Malaysia, as its Shanghai facility expands its yearly manufacturing capacity to over 1 million units.

(Adapted from CNBC.com)