This article first appeared on GuruFocus.
Tesla Inc. (TSLA, Financials) started 2026 with a 9.3% year over year increase in China made electric vehicle sales, totaling 69,129 units in January, according to data from the China Passenger Car Association.The sum covers local and European and other exports.
The yearly rise was Tesla’s third straight, although sales fell 28.9% from December’s record 93,843 units. The drop is due to seasonal demand fluctuations and increased competition from BYD and Li Auto.
As new competitors released feature-rich models and aggressive pricing, Tesla’s share in China’s EV market fell to 8% in 2025 from 10% the year before. Its seven-year, low-interest financing option for Model 3 and Model Y consumers prompted Xiaomi and Xpeng to follow suit in January.
Slowing demand and political criticism to CEO Elon Musk’s public involvement hurt Tesla sales in key European nations.
Musk is confident about overseas growth drivers, including regulatory clearance for Tesla’s Full Self-Driving (FSD) software in China and Europe this month. As EV sales decrease, the firm relies on software income.
Tesla will need product revisions, software adoption, and price strategy to maintain dominance in the world’s largest EV market as competition tightens.