BEIJING, March 4 (Reuters) - Tesla's sales of

its China-made electric vehicles dropped 49.2% in February from

a year earlier to 30,688 cars, the lowest since August 2022, as

the U.S. automaker faces pressure from Chinese rivals in a

relentless smart EV price war.

Tesla, which makes its Model 3 and Model Y vehicles in

China, sold 93,926 Chinese-made vehicles worldwide in the first

two months, down 28.7% year-on-year, according to data from the

China Passenger Car Association (CPCA).

January-February sales were distorted by the Lunar New Year

holiday shifting from February last year to late January this

year and due to a partial suspension of Model Y production for

upgrade work.

Still, Chinese rival BYD , with its

Dynasty and Ocean series of EVs and plug-in hybrids, recorded a

90.4% increase in passenger vehicle sales to 614,679 units last

month.

BYD deepened a three-year-old price war in the world's

largest auto market last month with the launch of smart EVs -

EVs equipped with advanced driving-assistance systems - starting

at below $10,000. That prompted peers including Leapmotor

and Geely to follow suit with affordable

smart EV rollouts.

Both Tesla models made in China are smart EVs. Tesla also

exports its China-made EVs to markets including Europe, where

sales plunged 45% in January.

To increase the appeal of its aging models, Tesla made a

long-awaited update to its autopilot software in China to enable

city navigation in late February. It also kicked off deliveries

of the revamped Model Y in its second-largest market.

Model Y was the best-selling car in China itself in 2023 and

2024, although Chinese rivals have launched at least six models

in the past year to take on Model Y. Tesla still benefits from a

brand halo in China but analysts have said Xiaomi's ( XIACF )

YU7 crossover to be launched later this year would be the

strongest rival.

Sales of the Onvo L60, which Nio launched in April

to compete with Model Y and Toyota's ( TM ) RAV4, fell to

4,049 units in February. Nio Chief Executive William Li expects

the model will reach monthly deliveries of 20,000 units in

March, which he is counting on to improve Nio's profitability.