Chongqing - Tesla’s rollout of its Full Self-Driving (FSD) software in China has encountered new uncertainty after China was removed from the list of supported regions on the company’s official website, only months after being added as an available market.

The change comes as Tesla and the broader EV industry face a challenging market environment. Global EV growth has slowed from previous years, while Chinese automakers are increasingly using advanced driver-assistance technology as a key area of competition.

A Tesla Cybertruck on display at Green Heart Commercial Complex in Chongqing Luxe Valley. (Photo/Zheng Ran)

Tesla announced earlier on May 21 that FSD Supervised is officially available in China. The move followed years of delays: Tesla began offering a paid FSD option to Chinese buyers in 2019, while a limited trial was launched in 2025 before being suspended. In China, the system is positioned as Level 2 driver assistance requiring continuous human supervision, rather than fully autonomous driving. 

Tesla’s FAQ cites regulatory approval as a possible factor, noting that FSD (Supervised) may not be available in markets where authorities require specific approval. The company said it is working with governments worldwide to obtain regulatory clearance.

Tesla currently lists the United States, Canada, Mexico, Puerto Rico, Australia, New Zealand, South Korea, the Netherlands, Lithuania, Estonia, Denmark and Belgium as markets where FSD (Supervised) has been rolled out.

Localization remains a key hurdle

Bringing an overseas-developed driving system into China involves more than transferring existing software.

Differences in data regulation, local model training and road environments can affect how an overseas system performs after entering the Chinese market. 

Tesla's vision-based approach relies heavily on large volumes of driving data to train its neural networks, meaning capabilities developed on North American roads still require additional training, verification and adaptation for Chinese traffic conditions.

That challenge has become more significant as Chinese manufacturers develop their own advanced driver-assistance systems.

Industry analysts said Chinese systems such as Huawei’s ADS and Xpeng’s technologies benefit from data collected by large fleets of vehicles on local roads. The data covers a wide range of scenarios, from busy urban traffic to rural roads and extreme weather, helping developers improve their driving systems over time.

A NIO store at The MixC shopping mall in Chongqing, southwest China. (Photo/Zheng Ran)

For overseas systems, China's data-localization requirements also mean local road data and model training must comply with domestic rules. Data volume, quality, iteration efficiency and adaptation to specific driving environments are increasingly important factors in competition among intelligent-driving systems.

EV growth slows as competition intensifies

The FSD adjustment comes as global electric vehicle demand enters a slower-growth period.

SNE Research said 9.906 million new energy vehicles were delivered worldwide in the first half of 2026, up 5.5% from a year earlier. Its definition includes battery-electric and plug-in hybrid vehicles as well as commercial vehicles. That compares with an annual compound growth rate of about 40% between 2017 and 2025.

An Audi store at The MixC shopping mall in Chongqing, southwest China. (Photo/Zheng Ran)

The International Energy Agency, using a different methodology that excludes commercial vehicles, estimated global electric car sales at more than 9 million in the first half, down about 1% year over year. It expects sales of around 23 million for all of 2026, or about 29% of global car sales.

China, Tesla's largest manufacturing base outside the United States and a major EV market, is also showing signs of slower volume growth. SNE Research recorded 5.308 million new energy vehicle deliveries in China in the first half, down 9.5%.

At the same time, EV penetration remains high. Preliminary data from the China Passenger Car Association showed new energy vehicles accounted for 65% of China's passenger vehicle retail market in July after exceeding 60% for four consecutive months.  

China remains central to Tesla's manufacturing network

The uncertainty around FSD contrasts with Tesla's continued manufacturing expansion in China.

On August 18, Tesla said the six millionth battery pack had rolled off the production line at its Shanghai Gigafactory, about nine months after the five millionth pack was completed. The batteries are used in Shanghai-built Model 3 and Model Y vehicles sold in China and exported to Europe and the Asia-Pacific region.

The 6 millionth battery pack rolls off the production line at Tesla's Shanghai Gigafactory. (Photo/Tesla China)

The Shanghai factory accounts for about half of Tesla's global EV deliveries. More than 95% of its components are sourced locally, supported by more than 400 Chinese first-tier suppliers, over 60 of which have entered Tesla's global supply chain.