Tesla China: +9% sales despite a declining market

While the Chinese New Energy Vehicle (NEV) market is struggling at the start of the year with near-stagnant growth around 900,000 units, Tesla China surprises by showing 9.32% year-on-year growth. With 69,129 vehicles delivered in January 2026, the American manufacturer is holding its own where its competitors are collapsing.

BYD, the local giant, suffered a sharp 30% drop over the same period. How does Tesla manage to stand out in such a gloomy context? Between aggressive commercial strategies and operational resilience, let’s analyze the drivers of this counter-intuitive performance.

Tesla holds strong as the Chinese market slows down

January is traditionally a difficult month for the automotive industry in China, especially after the Chinese New Year celebrations. This year is no exception: the Chinese NEV market shows only 1% year-on-year growth, a near-plateau reflecting the sector’s slowdown.

In this context, BYD’s debacle is striking. The local champion delivered 210,051 vehicles in January, a 30.11% year-on-year drop and even 50.04% compared to December. Faced with this widespread collapse, Tesla shows 9% year-on-year growth, a remarkable performance that demonstrates particular resilience.

Admittedly, Tesla is not entirely immune to seasonal effects: the 69,129 units in January represent a 28.86% decrease compared to the 97,171 vehicles in December. But this monthly decline must be put into perspective. December always sees a massive year-end rush, while January mechanically suffers the backlash from festivities and the logistical disorganization of the Lunar New Year.

The main point lies elsewhere: Tesla is growing where the market is stagnant, and where its competitors are sharply declining.

Wholesale vs retail: understanding the real numbers

An important methodological point: the 69,129 vehicles announced correspond to wholesale sales, i.e., production delivered by Gigafactory Shanghai to distributors and commercial partners. These figures include both vehicles intended for the Chinese domestic market and those prepared for export to Europe and Asia.

Retail data—which measures actual sales to end customers—will be published later this month and will offer a more precise overview of effective demand in China. This distinction is very important: a discrepancy between production and final sales can reveal either an accumulation of inventory or, conversely, a supply shortage in certain export markets.

In Tesla’s case, Tesla vehicle production in China always raises questions about the distribution between the local market and exports. Gigafactory Shanghai operates as a strategic hub that supplies several continents simultaneously, which complicates the isolated analysis of the Chinese market.

Aggressive commercial strategies to boost demand

Faced with tax pressure and market sluggishness, Tesla has not stood idly by. The manufacturer deployed two major commercial initiatives in January, revealing remarkable tactical agility.

An unprecedented 7-year financing in the industry

On January 6, 2026, Tesla launched a 7-year financing offer, an absolute first in the Chinese automotive sector. This option significantly extends the repayment period, making it possible to reduce monthly payments and make vehicles more accessible despite the impact of the new purchase tax.

Psychologically, this measure plays a considerable role: it transforms the perception of the cost of acquisition and positions Tesla as a commercial innovator, beyond mere technological innovation. It is a signal of aggressiveness that has not gone unnoticed in the industry.

Return of insurance subsidies on the Model 3

On January 26, Tesla reactivated insurance subsidies on the Model 3, thereby reducing the total cost of ownership for buyers. This initiative directly responds to the pressure exerted by the new taxation and improves price competitiveness against local competitors.

The effect was immediate and spectacular: Xiaomi, Li Auto, XPeng, and NIO followed suit almost instantly, demonstrating that Tesla still sets the tone for promotions in the Chinese industry. When Tesla moves, the market follows.

A regulatory environment under pressure

These commercial initiatives are not marketing whims. They respond to a tightened regulatory context that weighs on the entire sector. Since January 1, 2026, a 5% purchase tax applies to all electric vehicles sold in China, mechanically increasing the final price for consumers.

At the same time, uncertainties persist regarding government trade-in programs, these purchase aid schemes that have long artificially supported demand. Their expiration or reduction creates a void that manufacturers must compensate for by their own means.

This dual fiscal and regulatory pressure largely explains the general sluggishness of the NEV market in January. Even local players like BYD, despite being better integrated into the Chinese ecosystem, are bearing the full brunt of this new economic situation.

Tesla, by leveraging the levers it controls (financing, insurance, promotions), partially compensates for what it does not control (national taxation, public subsidies). It is this adaptability that allows it to resist when others collapse.

Outlook for the coming months

What can we take away from this contrasted January? First, Tesla’s adaptability in the face of a hostile environment. Second, the strategic importance of Gigafactory Shanghai, which functions as an export hub as much as a production base for the local market. The balance between exports and domestic sales will be crucial in the coming months.

February is traditionally expected to be weak, with prolonged disruptions from the Chinese New Year. The true trend indicators will emerge over the entire Q1 2026, when we will have a stabilized quarterly view and complete retail data to confirm or nuance these initial signals.

Local competition remains fierce. BYD, despite its underperformance in January, has colossal resources and formidable vertical integration. NIO, XPeng, and newcomer Xiaomi are multiplying innovations and pricing offensives. But Tesla retains its uniqueness: a desirable premium brand, recognized technology, and commercial agility that allows it to navigate the storm.

To contextualize these figures in a broader perspective, official sector data shows that these Chinese trends are part of complex global dynamics where each automotive market is experiencing its own turbulences.

While the future compact Tesla at $25,000 could change the game in price-sensitive markets like China, the battle is primarily fought on the ground of current models, with commercial and financial weapons. I will continue to closely follow the evolution of Gigafactory Shanghai and the upcoming retail figures to refine this analysis.

And what do you think of Tesla’s aggressive commercial strategies in China? Do you think they are already influencing other markets where Tesla operates?