This is a Mint Premium article gifted to you.
Subscribe to enjoy similar stories.
American car buyers just lost federal EV tax benefits. Chinese incentives are also decreasing. That should pressure electric car sales in another key market for Tesla.
So far in 2025, EV sales have been solid. In October, NIO delivered a record 40,397 cars, up 93% from the 20,976 delivered in October 2024.
XPeng delivered a record 42,013 vehicles, up 76% from the 23,917 delivered in October 2024.
Li Auto delivered 31,767 vehicles, down 38% from the 51,443 delivered in the prior October.
Wall Street has rewarded growth lately. Coming into Monday trading, shares of NIO and XPeng were up 66% and 99% year to date. Li shares were down 13%.
Chinese EV leader BYD delivered 222,559 all-electric cars in October, up 17% from the same time a year ago. Combined, the four delivered 336,736 all-electric cars, up 18% from a year ago.
EV sales are solid, but BYD delivered a total of 441,706 vehicles, including plug-in hybrids, down 11% from last year. What’s more, it exported 83,542 vehicles, up 188% from a year ago, meaning domestic sales were 358,164 vehicles, down 24% from last year.
The Chinese new car market looks to be slowing. That isn’t good for Chinese auto makers, or for Tesla. The latter does a lot of business in the country: Sales in China accounted for more than 20% of Tesla’s 2024 revenue.
Tesla doesn’t report monthly sales or sales by region, leaving investors to rely on industry sources. Through September, Tesla sold about 438,000 vehicles in China, down 5% from one year ago, putting the company on pace for its first-ever annual sales decline in China.
China accounted for about 36% of Tesla vehicle sales in 2025, similar to the level in 2024 through three quarters.
Competition from other EV producers and a slowing market won‘t make it easy to make up the gap in the fourth quarter. Things aren’t going to get any easier in 2026, either.
“According to policies previously issued by Chinese officials, the [New Energy Vehicle] purchase tax exemption will be halved into 2026,” wrote Citi analyst Jeff Chung in a recent report. The potential result is falling sales in the first half of 2026, he added.
The Chinese subsidy cuts come as the federal government eliminated the $7,500 EV purchase tax credit in September. Buyers rushing to beat the expiration resulted in EVs accounting for a record 12% of new U.S. car sales in September. Tesla sold a record 497,099 vehicles in the third quarter, up 7% from a year ago, including 179,525 cars in the U.S., up 8% year over year.
What happens in the fourth quarter and beyond is something investors will be worrying about now.
Coming into Monday trading, both BYD and Tesla shares were up about 13% year to date.
Write to Al Root at allen.root@dowjones.com
Download the Mint app and read premium stories
Log in to our website to save your bookmarks. It’ll just take a moment.
You are just one step away from creating your watchlist!
Oops! Looks like you have exceeded the limit to bookmark the image. Remove some to bookmark this image.
Your session has expired, please login again.
You are now subscribed to our newsletters. In case you can’t find any email from our side, please check the spam folder.
This is a subscriber only feature Subscribe Now to get daily updates on WhatsApp

source