China’s EV Market Is Stumbling. Here’s Why Tesla (TSLA) Stock Isn’t Panicking

TLDR

• Chinese EV sales dropped sharply in February, with BYD down 41% and XPeng down 50% year-over-year.
• NIO, Li Auto, and XPeng combined for their worst monthly sales since January 2023.
• Tesla sold about 631,000 cars in China in 2025, down 4% — its first annual decline there.
• Tesla stock is up 37% over 12 months despite falling EV sales, driven by AI investor sentiment.
• Tesla must submit crash data for its robotaxi program to the NHTSA on or before March 9.

Chinese EV sales got off to a rough start in 2026, and the numbers don’t make for comfortable reading — for anyone in the sector.

Tesla, Inc., TSLA

BYD reported 187,782 passenger vehicle deliveries in February, down 41% from the same month last year. Its all-electric sales fell 36% to 79,539 units.

XPeng posted 15,256 deliveries, a 50% drop year-over-year. Li Auto came in at 26,421, down 5%. NIO was the only bright spot, reporting 20,797 deliveries — a 57% year-over-year gain.

Combined, NIO, Li Auto, and XPeng delivered 62,474 vehicles, down 10.6% from a year ago. That marks the worst monthly combined performance since January 2023.

For BYD, it was the steepest year-over-year delivery drop since tracking began in 2021.

Tesla has skin in this game. China accounted for 22% of Tesla’s revenue in 2025. The company sold around 631,000 cars there last year — down roughly 4% from 2024, and its first annual sales decline in the country.

Globally, Tesla moved about 1.6 million vehicles in 2025, down nearly 9% from the prior year. That’s two consecutive annual declines for the company.

AI Is Driving the Stock, Not EVs

Despite the falling sales, Tesla stock entered Monday up about 37% over the past 12 months. Investors are largely pricing in the company’s AI ambitions rather than its car business.

Tesla launched an unsupervised robotaxi service in Austin, Texas in June 2025. It plans to expand to more cities in the first half of 2026 and intends to unveil the third generation of its Optimus humanoid robot early this year.

Those AI milestones matter more to Wall Street right now than quarterly delivery figures. EV sales still matter though — they generate the bulk of Tesla’s cash flow, which funds its AI investments.

March 9 Deadline for Safety Data

There’s another date on the calendar that investors are watching closely: March 9.

Tesla is expected to submit crash data related to potential FSD traffic violations to the NHTSA on or before that date. The submission is part of an active NHTSA investigation.

Tesla has reported 14 incidents involving its Austin robotaxi service since it launched in June 2025. The NHTSA identified 58 incidents when it opened the investigation, with Tesla reportedly needing to review more than 8,300 records.

Looking at the 14 reported collisions, many occurred at very low or zero speed. In several cases, the robotaxi had reportedly stopped before impact. The reports do not assign fault.

Tesla’s own published safety data shows a major crash with supervised FSD occurs every 5.3 million miles, compared to the U.S. driver average of 660,000 miles.

Meanwhile, Tesla’s Chinese rivals are feeling the pressure too. NIO stock is up 5% over the past 12 months. Li Auto is down 43%, XPeng is down 18%, and BYD is down 23%.

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