Tesla Motors posted its first annual profit on Wednesday, recording $721 million in income attributable to shareholders, as total revenues grew 28% to $31 billion.

Some of that profit was driven by Tesla selling hundreds of millions of dollars in regulatory credits to automakers in the U.S. and EU that are failing local environmental standards. But maybe the most significant driver has been Tesla’s booming sales in China.

“We are currently the leader in the Chinese EV market, so I think we must be doing something right if we’re the bestselling electric car in China,” Tesla CEO Elon Musk said during an earnings call Wednesday, although the company doesn’t break out its sales by region.

According to China research company Ways, Tesla seized the pole position in the Chinese EV market during the first half of 2020, shipping 50,000 vehicles and occupying 21% of the market. According to Reuters, Tesla produced—although, didn’t necessarily deliver—150,000 cars in China for the full year of 2020. Tesla says it produced 509,737 cars total last year.

The completion of Tesla’s Shanghai Gigafactory in September 2019, which allowed Tesla to avoid import taxes and shipping delays on cars sold in China, no doubt accelerated the automaker’s China growth. But Tesla’s race to the front was a coup for China’s consumer EV market in general—not just for the California company.

Prior to Tesla’s ascent, commercial fleets, such as electric buses and taxis, accounted for the majority of EV sales in China. Tesla’s dash to the front proved the consumer market was opening up. According to estimates from the China Association of Automobile Manufacturers, total EV sales in China reached 1.3 million units in 2020—up from 1.1 million the year before.

“The China growth story is worth at least $100 per share in a bull case to Tesla as this EV penetration is set to ramp significantly over the next 12 to 18 months,” Wedbush analyst Dan Ives said in a note in advance of Tesla’s earnings, calling China the “heart and lungs” of Tesla’s soaring stock.

But competition in China is intensifying, with local manufacturers Xpeng and Li Auto flush with cash from billion-dollar IPOs last year, and NYSE-listed Nio issuing $1.3 billion in convertible notes earlier this month.

Shanghai-based Nio claims the new model it unveiled on Jan. 9, the ET7, has a single-charge range of 1,000 kilometers (621 miles)—making it the longest ranging EV in the world. However, deliveries of the ET7 won’t begin until next year, while Tesla already began delivering its latest Shanghai-made Model Y this month, after knocking the price down 30%.

Demand for the new marque could drive Tesla’s success in China even further in the year ahead.