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Tesla's China built electric vehicle business started 2026 with a strong rebound, narrowing some of the ground it had recently lost to domestic rival BYD in the world's largest auto market. Shipment data covering January and February show the U.S. manufacturer significantly increased deliveries from its Shanghai factory even as the broader industry navigated the seasonal slowdown surrounding the Lunar New Year holiday.
Figures released by the China Passenger Car Association indicate Tesla delivered 127,728 China made vehicles during the first two months of the year. That represents growth of more than 35 percent compared with the 93,926 units recorded during the same period in 2025.
The association adjusted the comparison to reflect the typical production and retail dip that occurs when factories close and consumers travel during the mid February holiday period.
Vehicles produced at the Shanghai Gigafactory include the Model 3 sedan and the Model Y sport utility vehicle, models that are shipped to Chinese buyers as well as customers in Europe and other Asia Pacific markets.
Despite Tesla's improvement, BYD continues to dominate overall electric vehicle volumes. The Shenzhen based company overtook Tesla last year to become the world's largest EV seller on a calendar year basis.
BYD reported a 36 percent drop in deliveries during the opening months of 2026 compared with a year earlier, yet it still maintained a clear lead over international and domestic competitors.
Tesla's shipments from China also remained comfortably ahead of the next closest challenger, Leapmotor, highlighting the scale advantage the company still holds through its export focused manufacturing hub.
Competition across China's EV industry, however, is intensifying as domestic automakers introduce new technology, broaden model lineups, and compete aggressively on price.
Geely recently captured attention after its Xingyuan model topped national sales rankings in February, outperforming vehicles from both Tesla and BYD.
Meanwhile Xiaomi's YU7 sport utility vehicle had already displaced Tesla's Model Y as China's best selling car a month earlier.
