China's Home EV Market Is Shrinking Fast
China's domestic car market is under heavy pressure. The CPCA, the third-party group that tracks the sector, forecasts a 16% drop in sales across the whole market. That equals about 4.5 million cars lost year-over-year. BYD (BYDDY) and other makers are taking a hit at home because of this.
Where Each Company Stands
With a smaller home market, the first move for these companies is to grow abroad. BYD (BYDDY) and Chery rank as the top international brands from China. Both are now close to 50% of sales coming from foreign markets, and both sell in dozens of countries.
XPeng (XPEV) is leaning into robotics, chip design, and EV work. The goal is to be seen as a cutting-edge tech company that also builds cheap, smart EVs. XPeng (XPEV) is also growing in foreign markets. Its strategy runs on several fronts, but the weak home market keeps throwing obstacles into its global growth plans.
NIO (NIO) reports earnings tomorrow morning. NIO was first sold as China's answer to Tesla (TSLA) because it offered a nicer vehicle at the time. Some peers have passed it by, but NIO's recent sales tell a stronger story. In the first half of the year it is firing on all cylinders. NIO made battery swapping work and has now passed 100 million battery swaps in total, a major milestone. Its lead vehicle is the ES8, a B-segment premium model priced around $40,000 to $55,000 in China. The ES8 is shipping about 10,000 units a month, a level NIO could not reach before. Its multi-brand plan - NIO, Onvo, and Firefly - saw all three brands grow in the first half. Tomorrow's report should build on that momentum. NIO is the most China-focused brand, so to cut that risk it will likely have to enter foreign markets late this year or early next.
Tesla and China
For Tesla (TSLA), the China market matters at both ends. On production, Tesla ships about half of its global vehicles from Shanghai Giga - around 800,000-plus units built there and exported to Japan, the EU, the UK, and Australia. On sales, about 33% of Tesla's 2025 sales, roughly 600,000 units, came from China. Tesla Shanghai still produces between 60,000 and 80,000 units a month, but the mix is shifting toward exports because the Model 3 and Model Y are getting old in the China market. Tesla (TSLA) is less exposed to China than people expected a decade ago, and it stands out as one of the few that blends scale, robotics, and automation leadership.
Tesla Stock and an Options Trade
On a red day, Tesla (TSLA) was up 4%. The likely driver is what people value Tesla for and why its forward P/E is so high: robotics. The robotaxi is supposedly coming with a launch event, and the Semi is due in late September with its own event. Over the past month the stock rallied about 22%, moving from about $297 a share at the end of July to above $360.
Here is a neutral-to-bearish options trade that still leaves upside room. The stock is hitting its 50-day simple moving average, a possible resistance point. Using the September monthly option with 18 days to expiration (about two and a half weeks), sell an out-of-the-money short call vertical: sell the 375 call and buy the 385 call, a short $10-wide vertical. It collects about $2.60 credit (trading over three dollars at the time). The credit you collect is the most you can profit. That means about $260 in reward against roughly $740 in risk - more risk than reward - but with over 3.5% cushion to the upside before the break-even at $377.60. The odds of finishing out of the money on the short 375 call are about 62%, giving a higher chance of success while still taking a directional view with more room before losses start.
