Tesla is starting off 2026 on a positive note in China, with the company posting its third consecutive month of year-over-year sales growth out of Giga Shanghai. Despite facing increasing competition in the world’s largest EV market, Tesla managed to sell 69,129 China-made electric vehicles in January, a 9.3% increase compared to the same month last year.
The data, sourced from the China Passenger Car Association and reported by Reuters, includes both domestic deliveries and exports to markets like Europe, showcasing the significance 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, highlighting the company’s resilience in a challenging market environment.
However, January did present challenges for Tesla, as deliveries of Shanghai-built Model 3 and Model Y vehicles dropped by 28.9% from December’s record-breaking total. This decline was attributed to seasonal demand fluctuations following a strong end to 2025, where December marked Tesla China’s second-strongest month ever by wholesale volume.
In the broader context, Tesla’s longer-term performance in China has been under pressure, with China-made EV sales falling by 7.1% for the full year of 2025. This decline reflects weakening demand in major European markets and increased competition from domestic rivals, with Tesla’s share of China’s EV market slipping to around 8% last year.
Despite these challenges, Tesla remains optimistic about sustaining momentum in China. The company is banking on regulatory approvals for its Full Self-Driving software in China and Europe, with a focus on software and services to drive growth in a moderating global EV demand environment.
In response to the competitive landscape, Tesla has seen strong interest in China-specific offerings like the China-exclusive Model Y L, a three-row variant that has reportedly been sold out months in advance. This highlights the importance of product differentiation in a crowded market.
As the industry experiences a slowdown in EV sales and exports in China, Tesla’s ability to maintain growth will depend on genuine domestic demand versus continued reliance on exports. With anticipated regulatory approvals for key software updates and a focus on product differentiation, Tesla is positioning itself to navigate the evolving market landscape in China.
Overall, Tesla’s performance in China in January signals a continuation of late-2025 momentum, but the real test lies in sustaining growth amidst increasing competition and changing market dynamics. Stay tuned for further developments from Tesla in the world’s largest EV market.