Tesla's China business is rapidly shifting its centre of gravity from domestic sales to exports.

Electrek, an electric-vehicle outlet, reported on Oct. 13 that Tesla sold 381,088 vehicles to Chinese consumers in January to September, down 11.9 percent from a year earlier. Exports from the Shanghai Gigafactory rose 108 percent to 361,972 vehicles.

Total shipments from the Shanghai plant rose 22.5 percent to 743,060 vehicles over the period. Most of the increase came from overseas deliveries. Exports accounted for 49 percent of total shipments, up from 29 percent a year earlier. That means nearly half of Tesla vehicles made in China are now leaving the country.

Sales in China weakened further. Tesla's January-September sales in China were the lowest in the past 4 years. That was down 17 percent from 460,203 vehicles in the same period of 2024. The decline was larger in the third quarter. Third-quarter retail sales in China fell 16 percent to 142,133 vehicles, and July sales were down 33 percent on a monthly basis. September sales totalled 64,837 vehicles, the highest in the quarter, but still down 9.4 percent from a year earlier.

China's overall EV market is also slowing. The China Passenger Car Association said retail sales of new energy vehicles fell 12.8 percent through September after the purchase-tax exemption was halved from Jan. 1. Tesla's year-to-date decline was similar to the market average, but it posted a bigger 16 percent drop in the third quarter versus about 10 percent for the market.

The Shanghai plant, however, kept a high utilisation rate. Total shipments in July were 93,579 vehicles, the highest ever for that month. Exports, not domestic demand, drove the result. Tesla's overseas shipments from China this year have already exceeded its full-year exports of 344,078 vehicles in 2023, 259,548 in 2024 and 226,034 in 2025.

The shift in the Shanghai plant's role also differs from Elon Musk (일론 머스크)'s early plans. Musk said at the start of construction in 2019 that the Shanghai Gigafactory would produce a "cheaper 3/Y version for greater China". Around the same time, he also said, "A reasonably priced car should be made on the same continent as its customers." But the Shanghai plant began producing vehicles for Australia, New Zealand and Europe from late 2020, and it now supplies Europe, Asia-Pacific and Canada.

The change is also affecting Tesla's global supply structure. Third-quarter shipments from the Shanghai plant were 275,111 vehicles, equivalent to 57 percent of Tesla's worldwide deliveries of 486,532. Over the same period, sales to Chinese consumers accounted for 29 percent. That suggests the Shanghai plant is both offsetting weaker China demand and supporting the company's overall deliveries.

The issue is that the cost of this export-driven strategy could rise. China's Ministry of Finance and the State Taxation Administration said on Oct. 14 they will cut the export value-added tax rebate rate for EVs and plug-in hybrid vehicles to 9 percent from 13 percent from April 1, 2027. Because the 기준 is the customs declaration date, automakers could bring forward export shipments before the change takes effect.

The export rebate is a system under which Chinese exporters are refunded value-added tax paid domestically. The portion not refunded remains as a cost. As a result, additional per-vehicle burdens will arise when exporting EVs from China after April 2027. Tesla sends about half of its China-made output overseas, so the impact is relatively large.

The same change applies across Chinese automakers. The China Association of Automobile Manufacturers said China's EV exports exceeded 4 million vehicles in January to September, more than doubling from a year earlier. That creates a shared burden for companies that have been offsetting weaker domestic demand with exports.

In this situation, the market is focused on two points. In the short term, shipments from the Shanghai plant could stay strong as exporters push volumes ahead of the rebate cut. Over the medium to long term, attention is on how the plant's production strategy will be adjusted if weaker China demand overlaps with higher export costs. As Tesla has effectively turned a plant once aimed at mass-market demand in China into a global export hub, the sustainability of that strategy is expected to face a test after 2027.