Tesla Inc. is expected to post its first quarterly sales increase this year after car buyers in China, the world’s largest electric vehicle market, seized on a sweetened government incentive.

China is becoming a crucial market for Tesla, with the electric-vehicle maker offering incentives to boost sales in the country and its Shanghai factory recently exporting its 1 millionth vehicle.

Tesla said Wednesday that its global sales of cars and trucks rose 6.4 percent in the third quarter, the first quarterly increase the company has reported this year and a sign that demand for electric cars may be recovering as interest rates fall.

Shares of Tesla fell 3.5% Wednesday after the electric vehicle maker’s third-quarter deliveries came in slightly below estimates, underscoring the challenges of the EV market and the burden of high expectations.

Tesla handed over 462,890 vehicles in the July-September period, up 6.4% from a year earlier, marking its first quarterly growth after two straight quarters of falling sales. But that fell short of 469,828 deliveries expected on average by 12 analysts polled by LSEG.