The city's council apologised last year after it was claimed the structure, shipped in from China, would be 40m (131ft) but it was actually 40ft (12m).
It said an "internal error" meant it was advertised as the wrong height.
A spokesman said the authority has received offers from potential sponsors who want to pay for a real tree.
Despite last year's artificial structure outside Cardiff Castle being advertised as 40m, a contract was only for a 10m tree on a 3m base (40ft in total), he added.
It drew a range of responses from local people, such as being likened to a Ferrero Rocher tower.
A £30,000 three-year agreement with the provider lasts until 2018 but the spokesman said talks had begun on swapping the tree provision for other illuminations for the castle.
Despite the issue, the city's Christmas market, Winter Wonderland, tree, lights and decorations cost about £18,000 in 2016, compared to £220,000 in 2011.
Cardiff's £10,000-a-year artificial Christmas tree will be replaced by a real one in 2017 following issues over its height and cost.