Despite an overall cooling of China's electric vehicle market at the beginning of 2026, Tesla (TSLA.US) bucked the trend to achieve a third consecutive month of sales growth, with its January deliveries in China rising 9% compared to the same period last year. Preliminary data released on Wednesday by the China Passenger Car Association shows that the automaker, led by Elon Musk, delivered 69,129 vehicles from its Shanghai factory in January. Although a 5% vehicle purchase tax was imposed on new energy vehicles and plug-in hybrids in the domestic market this year, coupled with a significant reduction in subsidies for replacing entry-level models, Tesla has continued to attract consumers through promotional strategies such as seven-year ultra-low-interest car loans and an 8,000 yuan (approximately $1,153) insurance subsidy.
The association indicated that the overall wholesale sales of new energy vehicles in China, including pure electric and plug-in hybrid models, remained largely flat in January, with a marginal increase of 1% to 900,000 units; the organization did not separately disclose export figures. Domestic new energy vehicle startups, which had previously experienced rapid growth, were not spared from the sales decline this time. XPeng's (XPEV.US) January deliveries plummeted by 34%; Li Auto (LI.US), often considered the most resilient among the newcomers due to its focus on extended-range hybrid models, also saw its deliveries drop by 8%.
It is noteworthy, however, that the first and second months of the year are traditionally a slow season for the automotive market, influenced by the Lunar New Year holiday. The current industry weakness suggests that China's new energy vehicle market has entered a mature stage of development. Tesla is pinning its hopes on gaining domestic market approval for its Full Self-Driving assistance system, which still requires constant driver monitoring, to maintain its premium brand positioning; meanwhile, domestic competitors are also intensifying their efforts in similar intelligent driving technologies and continuing to deepen their presence in the hybrid vehicle market.
For automakers such as BYD (01211) and Geely Auto (00175), the shifts in the domestic market are accelerating their pace of global expansion. Overseas deliveries have been a bright spot for BYD, surging more than 50% year-on-year, with international sales now accounting for nearly half of its total deliveries.
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