Tesla 's domestic sales in China fell 45% year-on-year to just 18,485 units in January, the lowest monthly retail sales in the country since November 2022. The data, released by the China Passenger Car Association (CPCA), paints a bleak picture of demand for Tesla in the world's largest electric vehicle market
This performance represents an 93,843 record December's. While seasonal declines between December and January are normal in China, a 45% year-on-year decline is not.
Tesla China: Are things that bad?
Tesla and its backers will point to the wholesale number, 69,129 units from Giga Shanghai in January, up 9.3% year-over-year. That number includes both domestic deliveries and exports. On the surface, it looks good.
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But the analysis reveals the real story. Of those 69,129 vehicles, 50,644 were shipped to overseas markets (the second-highest month of exports in history after October 2022 with 54,504 units). Exports were up 71% year-on-year. Only 18,485 units ended up in Chinese customers.
In other words, 73% of Giga Shanghai’s production in January left the country. For comparison, in January 2024, about 44% of production was exported. In January 2025, it was 47%. Tesla is increasingly using its Shanghai factory as an export hub rather than a means to meet Chinese demand.
The domestic retail trend is worrying: from almost 40,000 in January 2024 to less than 19,000 two years later.
Demand for the Tesla Model Y has fallen in China
According to retail sales data , the Tesla Model Y fell to 20th place among all passenger vehicles sold in China in January. The Xiaomi YU7 , a direct competitor to the Model Y, took first place with 37,869 units.
On the Model 3, things aren't any better. The Xiaomi SU7 outsold the Model 3 in China for the first time, shipping over 22,000 units compared to around 8,000 Model 3s.
Wholesale data shows that the Model Y accounted for 38,916 units (up 21% year-over-year) and the Model 3 30,213 units (down 2.5% year-over-year), but these numbers include exports and do not reflect actual demand from Chinese consumers.
Why did sales decrease?
Several factors contributed to the January collapse, although none fully explains the extent of the decline.
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First, there’s the pushback effect. December 2025 was Tesla’s best-ever retail month in China with 93,843 units, as buyers rushed to buy before the reinstatement of a 5% purchase tax on NEVs that began on January 1, 2026. That tax had been completely waived for over a decade. Some of January’s weakness is due to December’s strength.
Second, subsidies vehicle-sharing China's ended in most cities in mid-November and remain in a transitional phase, generally reducing demand.
Third, the broader NEV market was weak. Overall passenger NEV sales in China fell 20% year-on-year, according to CPCA estimates. Even BYD saw its NEV sales fall 30% year-on-year and 50% month-on-month.
However, even BYD's weak month produced 210,051 units. Tesla's 18,485 is on a different level.
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The declining sales aren't a one-month problem. In January, it was reported that 2025 was the first year that Tesla faced a year-over-year decline in domestic retail sales in China.
Despite Tesla's response with aggressive promotions, financing offers, an unprecedented seven-year financing program with an ultra-low interest rate of 0.5%, and insurance subsidies on the Model 3, demand is still subdued.
