Electric vehicle deliveries from Chinese EV giant BYD came in just about as expected. That’s the good news. The bad news is concerns over the health of the Chinese car market still linger.

That matters for BYD. It matters for everyone, including Tesla. China is the number one market for new cars—and new EVs—in the world.

Friday, BYD reported February deliveries. The company sold 54,908 all-battery electric vehicles in the month, down 39% year over year. BYD also sells plug-in hybrid vehicles. It sold 66,840 of those, down 34% year over year.

Some drop was expected. The Chinese Lunar New Year Holiday fell in February this year. In 2023, the holiday fell in January. For the first two months of the year, BYD sold 160,212 all-electric vehicles, down about 1% year over year. It sold 162,555 plug-in hybrids, down about 10% year over year.

BYD shares were up about 0.7% in overseas trading. The rise partly reflects where the stock is starting from. The move leaves shares down about 9% year to date.

Investors have been worried about slowing new car demand in China as Tesla, and others, have cut prices early in the year to boost demand.

According to Citi analyst Jeff Chung who tracks industry data, Chinese auto makers sold about 25.4 million passenger vehicles in 2023, including some 6 million all-battery electric vehicles and 2.7 million plug-in hybrid models. He projects 26.1 million passenger vehicles will be sold in 2024, up about 3%. His call on battery electric vehicles is about 7 million units. His plug-in hybrid projection is 4.1 million units.

Those numbers mean that he expects some 42% of all new car sales in China to plug in—whether they are hybrids or all-battery electric vehicles. That’s up from about 34% in 2023.

Growth in China would be a positive for the EV sector. It’s too early to tell how the year will turn out. The first few months of the year are a seasonally weak time for car sales in China.

Chinese EV peers NIO, XPeng, and Li Auto also reported February sales volume on Friday. The trio delivered 32,928 units in February, down 5% year over year. Sales came in at 82,398 for January and February combined, up about 30% year over year.