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TSLA

China retail keeps falling; FSD in Japan this year depends on regulators

Sources (3)

Tesla's retail sales in China fell 11.9% in January-September and 16% in Q3, and it is losing share. The Shanghai factory is leaning on exports to prop up wholesale volume: exports rose 108% and now make up 49% of wholesale. The more complete number is the factory's total wholesale, up 22.5%, which already nets out the fall in sales inside China.

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Tesla Japan's president has reiterated the plan to launch supervised FSD this year but concedes that regulators will decide, so a launch this year looks unlikely.

Key evidence

  • CPCA data published on Friday 9 Oct: Tesla China retail sales were 381,088 in January-September, down 11.9% year on year and the lowest for the period in at least 4 years. Q3 retail was 142,133, down 16%; July alone fell 33%, and September, at 64,837, was still down 9.4% (Electrek, 13 Oct)
  • Shanghai exported 361,972 vehicles in January-September, up 108% year on year and already more than in any full year of 2023, 2024 or 2025. Exports rose from 29% of wholesale a year earlier to 49%. The more complete number is the factory's total wholesale, up 22.5%, which already nets out the fall in sales inside China; the growth comes entirely from exports
  • Industry backdrop: China's overall NEV retail sales fell 12.8% (the purchase-tax exemption was halved from January). In Q3 the market fell about 10% and Tesla 16%, so Tesla lost share during the quarter
  • Policy variable: Beijing has announced a cut to the export tax rebate on EVs next year, which will raise the cost of using exports to offset weak domestic sales. This follows the suspension of orders for the Shanghai-built Model 3 in Canada on 14 Oct
  • Tesla Japan president Richi Hashimoto, in a Nikkei interview on 19 Oct, reiterated the plan to launch supervised FSD in 2026, but admitted that it is not Tesla's decision and that it will be difficult
  • Road testing in Japan began in Shinjuku in August 2025, and in September the Cybercab toured Tokyo, Osaka and Nagoya. Driverless operation needs both an L4 permit from the Ministry of Land, Infrastructure, Transport and Tourism and approval from the Public Safety Commission; neither has been decided
  • The Japan Automobile Importers Association's 'other' category (which includes Tesla) registered 20,216 vehicles in January-September, against 8,066 a year earlier

Catalysts to watch

  • Results tomorrow evening (21 Oct): whether export freight and tax rebates drag on China revenue and automotive gross margin
  • EU vote on supervised FSD in December
  • Progress on approvals in Japan: the L4 permit from the transport ministry and the Public Safety Commission permit
  • China's cut to the EV export tax rebate takes effect in 2027

Risks

  • Tesla keeps losing retail share in China and lagged the market by 6 percentage points in Q3
  • A lower export tax rebate directly squeezes the unit economics of Shanghai's exports
  • Policy and quota uncertainties keep building in overseas markets such as Canada and Europe
  • FSD in Japan is unlikely to launch this year and should not be priced as a sure catalyst

Sources 3

  1. Electrek, 13 Oct (compiling CPCA data)
  2. Nikkei, 19 Oct (interview with Richi Hashimoto)
  3. Japan Automobile Importers Association, January-September registration data

A brief is a lead for our research, not a verified conclusion or advice.