Chinese EV Makers Could See Steeper Sales Declines in February — Market Talk

By Stephen Wilmot

Chinese electric-vehicle stocks dropped on Monday after manufacturers reported weak January sales due to waning government support.

Market leader BYD said it sold about 210,000 vehicles in the month- down 30% from January last year and missing expectations, according to Citi.

Analysts were expecting a faltering start to the year after tax breaks were cut at the start of January. Beijing is withdrawing financial support for the EV industry after years of generous subsidies led to excess production capacity and cutthroat competition.

Chinese automakers are responding to the pressure at home by focusing on exports. BYD, which has overtaken Tesla as the world's biggest EV maker, shipped roughly 100,000 vehicles abroad last month, up 51% from a year earlier.

January sales reported by Xpeng, NIO and Leapmotor also fell short of forecasts, while Geely and Xiaomi performed better.

This item is part of a Wall Street Journal live coverage event. The full stream can be found by searching P/WSJL (WSJ Live Coverage).

By Stephen Wilmot

Chinese electric-vehicle stocks dropped on Monday after manufacturers reported weak January sales due to waning government support.

Market leader BYD said it sold about 210,000 vehicles in the month- down 30% from January last year and missing expectations, according to Citi.

Analysts were expecting a faltering start to the year after tax breaks were cut at the start of January. Beijing is withdrawing financial support for the EV industry after years of generous subsidies led to excess production capacity and cutthroat competition.

Chinese automakers are responding to the pressure at home by focusing on exports. BYD, which has overtaken Tesla as the world's biggest EV maker, shipped roughly 100,000 vehicles abroad last month, up 51% from a year earlier.

January sales reported by Xpeng, NIO and Leapmotor also fell short of forecasts, while Geely and Xiaomi performed better.

This item is part of a Wall Street Journal live coverage event. The full stream can be found by searching P/WSJL (WSJ Live Coverage).

Hong Kong's benchmark Hang Seng Index closed 2.2% lower at 26775.57 on Monday amid a wider market sell-off. The biggest drag came from automaker BYD, which slid 6.9%, its steepest daily drop in eight months, after releasing January sales figures. Analysts expect China's auto sector to face a tough 2026. Higher effective purchase taxes on electric vehicles and tighter policy conditions are likely to drive a clear downtrend for EV makers, Nomura analysts say. Telecommunication also weighed on the index. China Unicom and China Telecom fell 6.3% and 5.0%, respectively. Data from China's Ministry of Industry and Information Technology showed slowing revenue growth in the telecom sector, prompting listed operators to focus on cutting operating costs, Morningstar says. (megan.cheah@wsj.com)

Hong Kong's benchmark Hang Seng Index closed 2.2% lower at 26775.57 on Monday amid a wider market sell-off. The biggest drag came from automaker BYD, which slid 6.9%, its steepest daily drop in eight months, after releasing January sales figures. Analysts expect China's auto sector to face a tough 2026. Higher effective purchase taxes on electric vehicles and tighter policy conditions are likely to drive a clear downtrend for EV makers, Nomura analysts say. Telecommunication also weighed on the index. China Unicom and China Telecom fell 6.3% and 5.0%, respectively. Data from China's Ministry of Industry and Information Technology showed slowing revenue growth in the telecom sector, prompting listed operators to focus on cutting operating costs, Morningstar says. (megan.cheah@wsj.com)

By Mauro Orru

Tesla closed the year with lower sales in Europe as Chinese auto giant BYD continued to outpace Elon Musk's electric-vehicle maker.

New-car registrations for Tesla models, a reflection of sales, slumped 20% on year to 35,280 units in December across the European Union, the U.K., Iceland, Liechtenstein, Norway and Switzerland, according to the European Automobile Manufacturers' Association, an industry body also known as ACEA. On an annual basis, Tesla sales contracted 27% to 238,656 units.

In contrast, registrations for China's BYD more than tripled to 27,678 units last month and to 187,657 for the whole year, according to ACEA data. While BYD still sold fewer vehicles in Europe than Tesla, the figures show how the fortunes of two key EV makers are diverging.

BYD has experienced a meteoric rise in the continent thanks to its relatively cheap lineup of electric and hybrid vehicles, creating stiff competition for both well-established domestic carmakers such as Volkswagen as well as foreign rivals like Tesla.

Meanwhile, Tesla has had to contend with the fallout from Musk's involvement with the Trump administration that came to an end a few months ago, weighing on buyer sentiment. Tesla sales gloablly fell 9% in 2025 and 16% for the fourth quarter compared with a year prior. The company lost its crown as the world's leading EV maker to the Chinese company BYD.

Earlier this month, Musk said Tesla would stop selling a suite of advanced driver-assistance features for a one-time payment after Feb. 14, switching instead to a monthly subscription service.

Tesla has been offering its Full Self-Driving system for a one-time payment of $8,000 or a subscription of $99 a month in the U.S. The announcement came as the group is looking to grow its recurring subscription revenue.

The EV market in the EU continued to improve in December, according to ACEA data. Sales of battery-electric vehicles grew 51% on year. Registrations of hybrid-electric cars increased 5.8%, while plug-in-hybrid models grew nearly 37%.

ACEA said passenger-car registrations in the EU increased 5.8% in December to 963,319 vehicles, with sales up 9.7% in Germany and 2.3% in Italy, but down 5.8% in France.

Write to Mauro Orru at mauro.orru@wsj.com

Tesla, Inc. investors may want to pay close attention. China's BYD Co. is increasingly setting its sights on the U.S. EV maker's core markets. BYD is targeting a 25% increase in electric vehicle sales outside China this year, aiming to sell 1.3 million vehicles overseas, Bloomber reported over the weekend, citing comments from the company's general manager, Li Yunfei.

Ironically, U.S. President Donald Trump's trade tariffs have accelerated BYD's international expansion, enabling the automaker to gain traction in markets such as Mexico. But the latest target underscores BYD's increasingly aggressive push to expand overseas sales — potentially encroaching on Tesla's strongholds such as Europe — as growth in the Chinese market sharply slows.

BYD's momentum has been especially notable over the past year. In 2025, the company overtook Tesla to become the world's largest electric vehicle seller, delivering 4.6 million vehicles — a 7.7% increase from the prior year. By comparison, Tesla delivered 1.64 million vehicles, marking an 8.4% year-over-year decline. 

But, EV Markets Still In Doldrums

To be sure, a global slowdown in the EV market — particularly in China — has weighed on both Tesla and BYD. The U.S. and China, the world’s largest EV markets, are phasing out tax subsidies and incentives even as competition among automakers intensifies.

Tesla said it delivered 418,227 vehicles in the October-December quarter, down 15.6%, and below analysts’ expectations of 434,487 vehicles. In December, BYD reported 420,398 deliveries, down 18.3% year over year and marking the fourth straight month of declines.

Citigroup in November said BYD had set a goal to expand overseas sales to between 1.5 million and 1.6 million units in 2026, citing a meeting with the company’s management, Bloomberg reported.

TSLA Under Pressure Heading Into Q4 Earnings

Owing to sluggish sales, Tesla's stock has been under pressure. It has gained 10.5% in the past 12 months, featuring in the middle of the Magnificent Seven peers (see chart). BYD’s U.S.-listed shares, BYDDY, gained 9.5% in the same period.

However, Stocktwits sentiment for TSLA was ‘bullish’ as of early Monday.

Tesla will report its fourth-quarter results on Wednesday. Analysts expect revenue to decrease nealy 4% to $24.8 billion, and adjusted profit to decline 38% to $0.45 per share, according to Koyfin.