Courtesy of Tesla, Inc.
Tesla is kicking off 2026 on a positive note in China, posting its third consecutive month of year-over-year sales growth out of Giga Shanghai — even as competition in the world’s largest EV market continues to intensify.
According to data from the China Passenger Car Association cited by Reuters, Tesla sold 69,129 China-made electric vehicles in January, representing a 9.3% increase compared to the same month last year. The figure includes both domestic deliveries and exports to markets like Europe and elsewhere, underscoring the continued importance of Tesla’s Shanghai factory as a global production hub. This marks the third straight month of annual growth for Tesla’s China-made EVs, despite broader headwinds facing the company in both China and Europe.
That said, January wasn’t without its challenges. Deliveries of Shanghai-built Model 3 and Model Y vehicles fell 28.9% from December’s record-breaking total of 93,843 units, a drop widely attributed to seasonal demand fluctuations following an exceptionally strong end to 2025. December was Tesla China’s second-strongest month ever by wholesale volume, capping off a notable resurgence in demand during Q4 after a relatively soft mid-year stretch.
Zooming out, Tesla’s longer-term performance in China remains under pressure. For the full year of 2025, China-made EV sales fell 7.1%, as the U.S. automaker grappled with weakening demand in major European markets and an increasingly cutthroat competitive landscape at home. Tesla’s share of China’s EV market slipped to roughly 8% last year, down from about 10%in 2024, highlighting how quickly domestic rivals have closed the gap.
Tesla’s January results also need to be viewed in the context of a broader industry slowdown. China’s EV sales and exports were estimated to grow just 1% year-over-year last month, a sharp deceleration from the combined 25% growth seen across 2025, according to CPCA data. The association noted that front-loaded vehicle purchases late last year weighed on domestic demand in January, with exports helping to partially offset the dip.
To stimulate demand, at least 10 automakers — including Xiaomi, Xpeng, and Dongfeng Nissan — have rolled out longer-term financing incentives after Tesla set a new benchmark by offering seven-year financing to Chinese customers. The move underscores just how fiercely competitive the market has become, even as overall growth cools.
Interestingly, Tesla has still seen pockets of strong interest in China-specific offerings. The China-exclusive Model Y L, a three-row variant, has reportedly been sold out months in advance, highlighting that product differentiation still matters in an increasingly crowded market.
Looking ahead, Tesla is betting on several potential catalysts to sustain momentum, including anticipated regulatory approvals for its Full Self-Driving software in China and Europe. As global EV demand growth moderates, software and services are expected to play a larger role in Tesla’s strategy. For now, January’s numbers suggest Tesla has managed to carry some of its late-2025 momentum into the new year — but the real test will be whether that growth is driven by genuine domestic demand or continued reliance on exports. Stay tuned.
