Tesla Inc. (TSLA) delivered some mixed messages from China as 2024 wrapped up. The December numbers look pretty good on their own, but zoom out to the full year and you'll see why investors might not be celebrating.

December's Strong Finish

After moving 86,700 wholesale vehicles in November, Tesla bounced back nicely in December with 97,171 units according to data from CNEVPost. That's a 12.1% jump from November and a 3.6% gain year-over-year.

To put that in perspective, it's the second-best month Tesla has ever posted in China, trailing only the 100,291 vehicles delivered back in November 2022. Two straight months of year-over-year gains suggests demand might be stabilizing in China and nearby export markets.

Remember, these wholesale figures include both vehicles sold domestically in China and units shipped to other countries. In November, for example, the split was 73,145 retail units in China and 13,555 exports.

The Full-Year Reality Check

Here's where things get less cheerful. That December rally couldn't save Tesla from posting its first-ever annual sales decline in China. Total wholesale deliveries came in at 851,732 units for 2024, down 7.1% from the prior year.

Tesla's domestic Chinese sales hit 531,855 units through December, well short of the 657,105 figure from 2024. It's a historic milestone for Tesla in China, and not the good kind.

What happened? The reports point to a couple of culprits. First, Tesla's Shanghai Gigafactory underwent retooling to produce the updated Model Y, which naturally crimped production. Second, and probably more concerning for the long term, competition in China's EV market has intensified dramatically.

Looking Ahead

Tesla's 2025 proved to be a year of extremes. The third quarter delivered record overall deliveries, boosted partly by buyers rushing to take advantage of the federal EV tax credit before changes kicked in. But demand wavered in various markets, influenced by both competitive pressure and shifting public sentiment around CEO Elon Musk.

The vehicle delivery story might matter less to Tesla's stock price going forward as investors increasingly focus on moonshot projects like robotaxis and robotics. But let's be real: vehicle sales still drive the bulk of Tesla's revenue and remain critical to the company's financial health. A struggling China operation isn't something you can just ignore, even if the robots are coming.