BEIJING (Reuters) -Sales of U.S. automaker Tesla's China-made electric vehicles grew 3% in August from a year earlier, data from the China Passenger Car Association (CPCA) showed on Monday. Deliveries of its China-made Model 3 and Model Y vehicles rose 17% from July. Chinese rival BYD, with its Dynasty and Ocean series of EVs and plug-in hybrids, posted a 35.3% year-on-year jump in passenger vehicle sales in August to a fresh monthly high of 370,854 units.

Other local EV competitors including Leapmotor and Li Auto also reported higher sales.

Tesla's rising China numbers, including domestic sales and exports to Europe and elsewhere, came amid extended incentives for local buyers as well as breakthroughs in winning over government backing.

An uptrend in Tesla's China sales seems to be underway in the third-quarter even though its local sales force has undergone downsizing as part of the U.S. EV giant's global layoffs.

In July, Tesla saw a 78% year-on-year increase in deliveries in tier-three cities while its sales in the second-tier cities such as Hangzhou and Nanjing rose by 47%, data and analysis by China Merchants Bank International (CMBI) showed.

"We project Tesla's retail sales volume to hit 65,000 units in August aided by strong growth in smaller cities. Should such momentum continue in September, Tesla may post the highest quarterly sales volume in China in 3Q24," said Shi Ji, an analyst with CMBI in Hong Kong.

Tesla has been offering a financing plan with a zero-interest loan of up to five years since April to attract buyers who tend to be more cautious with spending on big-ticket items in a sputtering economy.

The company has won endorsement from several local governments which have deemed Tesla cars eligible for official car purchases in recent weeks.

The country's top auto industry association said in April the data collection by Tesla vehicles in China was compliant, paving the way for Tesla cars to enter some government compounds that they used to be banned from.