Tesla is hitting another rough patch — this time in China, its second-largest market. Just a week after sales collapsed across Europe, new data shows Tesla’s retail deliveries in China fell sharply in October, marking the lowest level in three years.

According to Reuters, citing figures from the China Passenger Car Association (CPCA), Tesla’s China sales fell to a 3-year low amid slow demand. Tesla sold 26,006 vehicles in China last month, a 63% drop from September and down 35.8% from a year earlier. That’s the weakest performance since November 2022 and a steep reversal from the surge Tesla saw only weeks earlier when it began deliveries of the Model Y L, a longer-wheelbase six-seat version of its popular SUV.

“Sales fell 35.8% from a year earlier, down from September’s figure of 71,525 when Tesla began deliveries of the Model Y L, a longer-wheelbase and six-seat version of its best-selling Model Y SUV until now only available in China,” Reuters reported.

Tesla’s 63% sales crash in China is more than a bad month; it’s a warning shot. In the world’s largest EV market, where rivals like BYD and Xiaomi are surging ahead, the numbers hint at something deeper: a brand losing momentum. As competition stiffens and demand cools, Tesla could be staring down one of its toughest battles yet.

“This represents a 35.76 percent decline from 40,485 units sold in the same month last year and a 63.64 percent drop from 71,525 units in September,” CnEVPost reported.

Tesla Monthly Sales in China (Credit: CnEvPost)

The downturn highlights Tesla’s struggle to maintain momentum in the hyper-competitive Chinese electric vehicle market, where local automakers like BYD and Xiaomi are gaining ground. In October, Tesla’s market share slid to 3.2%, down from 8.7% in September — its lowest in more than three years.

Some of the slump stems from waning interest in the Model Y L, which initially fueled September’s spike. After Tesla’s September deliveries of 71,525 units, the company’s October tally looks like a hard landing. Analysts say the drop also reflects a shift in production priorities at Tesla’s Shanghai Gigafactory, where more vehicles were allocated for export rather than domestic sales.

Exports of China-made Teslas climbed to a two-year high of 35,491 units in October, up 84% from September. That helped offset part of the domestic shortfall, but it doesn’t change the broader picture: Tesla’s local demand in China is cooling at a time when competition is intensifying and price cuts have lost their bite.

China’s EV market, once Tesla’s crown jewel, has become crowded with homegrown challengers. Xiaomi’s new models — the SU7 sedan and YU7 SUV — posted record sales of 48,654 units in October, even amid safety concerns following accidents involving its sedans. Meanwhile, BYD continues to dominate with aggressive pricing and an expanding lineup that appeals to cost-conscious buyers.

Overall, car sales in China dipped last month as consumer sentiment weakened after government subsidies and tax breaks were scaled back. For Tesla, that means less tailwind in a market that has long driven its global growth story.

Including exports, Tesla’s total wholesale sales from China hit 61,497 units in October — down nearly 10% year-over-year and more than 32% from September. Model Y accounted for 38,562 of those, falling 35.6% from the previous month.

The numbers tell a clear story: Tesla’s momentum in China is fading fast. Whether it’s a temporary stumble or a deeper sign of market fatigue will depend on how quickly the company can reignite local demand and fend off increasingly capable rivals.

For now, the electric car pioneer that once set the pace for China’s EV boom is struggling to keep up in a race it helped start.

Watch the video below to see a breakdown of what’s really behind Tesla’s steep sales drop in China.