Tesla’s China made Model 3 and Model Y sales reached 85,670 units in March, an 8,7% year on year increase and a 46,2% jump versus February, extending the recovery trend that started in November 2025. The Shanghai plant remains the company’s export hub, so the figure blends domestic deliveries with overseas shipments, but it still marks a clear break from last year’s slump when aggressive price cuts and local rivals like BYD eroded Tesla’s share and profitability.
Putting together five consecutive months of rising volumes matters in a market as brutal as China’s EV space. It suggests that recent pricing, refreshed trims and marketing tweaks are stabilising demand, even if Tesla is a long way from the dominance it once enjoyed and must now fight for every incremental sale against domestic brands that keep launching cheaper, feature rich models.
Sales rose to 85,670 vehicles after a seasonal lull
Figures from the China Passenger Car Association show that $TSLA sales include Model 3 and Model Y vehicles destined for both the domestic and export markets. The March figures also reflect a rebound after a seasonal downturn around Chinese New Year, when production traditionally drops due to a two-week break.
For the entire first quarter of 2026, Tesla sales in China grew 23.5% year-over-year, a significant acceleration from just 1.9% growth in the previous quarter. The growth was boosted by a recovery in demand in Europe, where Tesla exports a significant portion of its vehicles from its Shanghai plant.
BYD posted a 20.5% drop despite the recovery
Tesla's main Chinese competitor, BYD $BY6.F, is facing challenges. BYD sold 300,222 electric vehicles in March, up 57.85% from February but down 20.45% year-on-year. This is the seventh consecutive month with year-over-year sales declines.
China's EV market remains in a price war, with manufacturers fighting for market share through discounts, putting pressure on profit margins. BYD disclosed last week that its 2025 net profit fell 19% due to a prolonged domestic price war.
Competition in the Chinese market is gaining momentum
Tesla's share of the Chinese EV market has fallen to 8% from 10% last year in 2024. Competition from domestic brands has intensified significantly, with Xiaomi's YU7 SUV dethroning Tesla's Model Y as the best-selling car in China in January and Geely's Xingyuan becoming the best-selling model in February.
Xiaomi's SU7 sedan, which starts at around $33,000, competes directly with Tesla's Model 3 and outsold it in sales in China in just a few months of 2025. The YU7 SUV launched in mid-2025 for less than $50,000 targets the Model Y.
European market provides relief for Shanghai plant
Registration data points to improving demand across several European markets. In France, Tesla registrations rose 203% year-on-year to 9,569 vehicles in March, just below the December 2023 record of 9,572 units.
Norway saw a 178% increase to 6,150 vehicles, while Sweden and Denmark saw growth of 144% and 96% to 1,447 and 1,784 units, respectively. In other markets, registrations rose 72% in the Netherlands to 1,819 vehicles and 25% in Spain to 2,477, according to RAI and ANFAC data.
The strategic pivot away from EVs continues
Tesla is expanding its focus beyond EVs. The company is positioning solar power, humanoid robots and autonomous robotaxis as future growth engines. In China, Tesla achieved a breakthrough in early 2026 when it received a full-fledged local FSD training permit, allowing it to compete more effectively with local tech rivals like Xiaomi and Huawei.
After a challenging 2025, which saw its first major annual decline in shipments, Tesla is now betting on a trio of catalysts: the mass Model 2, the commercialization of the humanoid robot Optimus, and the regulatory rollout of fully autonomous driving.
While Chinese-built car sales and European demand are showing signs of recovery, Tesla's near-term performance will continue to be closely tied to its upcoming delivery dates and its ability to navigate increasing competition across key markets.