Tesla Faces January Headwinds: Chinese Demand Drops as Exports Surge from Shanghai and Europe Slows

China’s domestic market shows the steepest decline, while Shanghai’s production remains robust but increasingly geared toward export. The European market is weaker in January, even as competition intensifies. Xiaomi’s YU7 tops China’s overall car sales in January, adding context to the competitive landscape.

China: domestic demand weakens to multi-year low

According to the China Passenger Car Association (CPCA), Tesla’s January domestic deliveries in China totaled 18,485 units, down 45% from a year earlier. Electrek notes this is the lowest monthly domestic value since November 2022.

A look at the month-on-month comparison reveals a dramatic drop from December’s record of 93,843 domestic deliveries, equating to an 80% decline. On the production side, Giga Shanghai built 69,129 vehicles in January, up 9.3% year over year, yet the export cadence shifted decisively: 50,644 units were shipped abroad, marking it as the second-highest export month cited in the CPCA data.

Shanghai’s export-heavy mix is reflected in the export share trajectory:

• January 2024: 44% of output exported
• January 2025: 47% exported
• January 2026: 73% exported

As a result, only a relatively small portion of Shanghai’s output remains for the Chinese market. Domestic volumes in January 2026 also show a 54% decline versus January 2024. In China, the Model Y further lost ground in CPCA’s retail data, slipping to 20th place among all passenger-car models in January.

Should investors sell immediately? Or is it worth buying Tesla?

Contributing factors cited by the CPCA report include the reintroduction of a 5% purchase tax on “New Energy Vehicles” at the start of the year, the phase-out of trade-in subsidies in mid‑November, and a softer overall NEV market — with NEV retail sales down about 20% year over year.

Europe: registrations slump as Tesla reshapes its distribution

Europe also posted meaningful January declines in new registrations, according to an IG Bank summary, with notable country-level weakness:

• Norway: -88% (83 vehicles)
• Netherlands: -67% (307 vehicles)
• United Kingdom: -57% (647 vehicles)
• France: -42% (661 vehicles)

At the same time, competitive dynamics are intensifying. The report notes Volkswagen overtook Tesla in 2025 as Europe’s largest EV seller, while BYD nearly doubled its volume in the British market during the same period. In China, Xiaomi’s YU7 led overall passenger-car sales for January with 37,869 units.

In response to the shifting demand and market structure, Tesla announced a leadership realignment in its global sales organization. Joe Ward, formerly Vice President for Europe, the Middle East and Africa (EMEA), will now assume global responsibility for Sales, Service and Deliveries, according to Bloomberg as cited by IG Bank. This follows the departure of Raj Jegannathan, who had led those functions for a short period.

The takeaway is clear: tempering demand in key markets, a rising export intensity from Shanghai, and a newly configured global sales leadership team intended to coordinate these efforts worldwide.