China’s Manufacturing Contraction to 49.3% Puts Tesla Sales in a Weaker Context

Key Facts

China’s official manufacturing purchasing managers’ index fell to 49.3% in October, down 0.8 percentage points from the previous month, according to the National Bureau of Statistics of China. The reading puts manufacturing activity against a weaker backdrop when assessing news about car sales in the Chinese market, including Tesla sales. The industrial production index fell to 49.8%, down 1.9 percentage points from the previous month. The manufacturing new orders index also fell to 49.4%, down 1.1 percentage points. The bureau published its October report on 1 November 2026.

The decline extended to the services sector, with the non-manufacturing business activity index at 49.7% in October, down 0.5 percentage points from the previous month, while the services activity index stood at 50.0%, according to the National Bureau of Statistics. The non-manufacturing new orders index fell to 44.4%, down 2.1 percentage points. The services new orders index stood at 45.2%, down 1.5 percentage points from the previous month. Caixin Global said manufacturing weakness reflected a decline in Christmas-season export orders after September, alongside weaker domestic consumption following the National Day holiday. This points to pressure on both external and domestic demand during October, alongside declines in the production and industrial orders indexes.

Against the backdrop of the auto sector, sales of vehicles manufactured at Tesla’s Shanghai plant rose 13.7% year over year in the third quarter, according to Reuters calculations based on CPCA figures. Over the same period, the company’s global deliveries fell 2.1% compared with the third quarter of 2025, which saw a record level. Through the end of October, Tesla had offered a 5,000-yuan discount on all Model 3 vehicles and 7,000 yuan on selected Model Y versions, amid fierce competition in the world’s largest auto market. In October 2025, the company’s sales in China fell about 36% year over year to 26,006 vehicles, after 71,525 vehicles in September 2025, according to the Associated Press. Claire Yuan of S&P Global Ratings said cutbacks in some regions supported trade-ins and that the impact of the subsidies could be weaker even if they were extended; the AP also reported expectations that the tax exemption for electric and hybrid vehicles would be halved starting in 2026.