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Tesla gets boost from China’s regulations as Europe sees influx of Model 3 registrations
Tesla’s push into the international market with its Model 3 electric sedan could see a notable boost, thanks in part to some unexpected support from Chinese regulations and what appears to be widespread support for EVs in the European region. With the Model 3 about to saturate the right-hand-drive markets, it appears that Tesla’s ramp of the vehicle is entering its later stages.
A recent update from Beijing stands to benefit the countries’ largest local electric car companies and Tesla, which is currently building a wholly-owned factory in Shanghai. In an announcement on Friday, China’s Ministry of Finance announced that it would be extending a sales tax break for battery-powered and hybrid vehicles. A change was expected to go into effect on Monday, but with the update in place, battery-powered and hybrid vehicles will still be exempt from a 10% sales tax until the end of 2020.
With the extension of the tax break, analysts from China have noted that strong brands in the EV sector, such as Tesla and local companies like Geely Automobile Holdings, SAIC Motor, NIO, and Xpeng Motors, would likely see benefits from the government’s adjustment. Tax break or not, the China Association of Automobile Manufacturers expect New Energy Vehicle (NEV) sales in the country to increase by 27%, which would translate to around 1.6 million units over the course of 2019. If these forecasts prove accurate, China will set another sales record for its NEV initiative this year.
If Tesla starts producing the Model 3 at Gigafactory 3 later this year, the company could tap into the country’s growing NEV market. Tesla, after all, is considered a premium brand in the country, holding a reputation that is not too far from Apple. Tesla’s vehicles like the Model X have been considered as status symbols in the past, and this could ultimately benefit the Model 3, which offers a more affordable entry point into the Tesla ecosystem.
Apart from a potential boost thanks to China’s regulations, Tesla’s push into the European market also appears to be bearing fruit. Tesla conducted a massive end-of-quarter push in Europe last month, as part of its attempt to meet or even break its record in Q4 2018, when it delivered over 90,000 vehicles in one quarter. Data from Europe’s car sales in June 2019 show that Tesla’s delivery push might have paid off.
June’s sales from the European region are currently trickling in, and based on data from countries such as Norway and the Netherlands, where registrations surpassed 2,500 for the first time, Tesla appears to be increasing its reach. Denmark also saw 426 Tesla registrations, which is more than four times the total for all of 2018. In line with the company’s end-of-quarter push, almost a third of Denmark’s Tesla registrations were submitted in the last week of June. This influx of registrations is likely due to the Model 3, which is currently being shipped to the region.
Bloomberg Intelligence global autos analyst Kevin Tynan believes that Europe’s momentum could help the company, particularly as the company’s expansion in the US “stalls.” The analyst also expects Tesla to meet competition in Europe and China, as the company will have to challenge established local competitors. “Tesla’s global push will deliver expansion as the US stalls, but at great expense to margin. And dominance of the battery-electric vehicle market may not come as easily in China and Europe, as the company faces established hometown — and government — favorites there,” Tynan wrote.
Tesla’s Model 3 ramp has been the focus of the company for over a year. As Tesla starts its push into the RHD territories this quarter, and as the company prepares to manufacture the Model 3 in China, the later stages of Elon Musk’s play into the mass market could finally be at hand. Once the Model 3 ramp reaches its full fruition, Tesla could start its next, more ambitious push into the mainstream: the Model Y, which will compete in the competitive and lucrative crossover SUV market.
In a major development that will inevitably strengthen Tesla’s dominant position in the American EV market, Polestar has been effectively banned from selling new vehicles in the United States, starting with the 2027 model year.
The U.S. Department of Commerce denied Polestar authorization under the Connected Vehicle Rule, which prohibits vehicles containing certain connected technologies (Cellular, Wi-Fi, Bluetooth, etc.) linked to China or Russia due to national security risks, including potential data collection on American drivers.
🚨 A Tesla competitor goes down
Polestar will no longer sell new vehicles in the United States starting with the 2027 model year.
The U.S. Department of Commerce denied the brand authorization under the Connected Vehicle Rule, which restricts the sale of cars with software and… pic.twitter.com/TrwnQeoiES
— TESLARATI (@Teslarati) June 25, 2026
Polestar, which is majority-owned by China’s Geely Holding, could not obtain the required exemption despite producing some models domestically.
Polestar confirmed it will sell off any remaining inventory of the Polestar 3 and Polestar 4 models, while continuing service and warranty support for existing customers. No new models or major refreshes will reach U.S. buyers, and the company is pivoting its growth strategy to Europe, where it already generates the vast majority of its sales.
The outcome removes a direct premium EV competitor that had positioned itself as a stylish, performance-oriented alternative to Tesla’s lineup. The Polestar 2 challenged the Model 3, while the Polestar 3 and 4 targeted segments overlapping with the Model Y and upcoming Tesla offerings. Polestar’s U.S. sales had already been sluggish amid intense competition and slower demand, representing just 6 percent of its global volume in the first quarter of 2026.
While Polestar was not on Tesla’s level in the U.S., it still places a dent in the evergrowing field of Tesla competitors in the country, where it has long dominated EV sales.
Tesla faces none of these hurdles. As a U.S.-founded and U.S.-headquartered company with major manufacturing in Fremont, Austin, and Nevada, Tesla’s vehicles are built with compliant domestic and allied supply chains. Its Full Self-Driving technology, over-the-air software updates, and vertically integrated ecosystem were developed entirely in-house without foreign ownership entanglements that trigger national security reviews, at least in the U.S.
Of course, it did face a similar threat in China a few years back:
Elon Musk responds to reports of Tesla ban among China’s military over security concerns
The Connected Vehicle Rule, first advanced under the prior administration and upheld under the current one, is part of a broader U.S. effort to protect the domestic auto industry and critical technology from Chinese influence. High tariffs on Chinese-made EVs and related restrictions have already reshaped the market. Tesla benefits directly: it avoids these barriers while continuing to lead in U.S. EV sales volume, Supercharger network expansion, and energy storage integration.
By clearing Polestar from the new-vehicle playing field, the policy reduces competitive pressure in the premium and performance EV segments where Tesla has invested billions. American consumers seeking cutting-edge electric vehicles now have one fewer option tied to foreign adversaries — and one clearer path to the market leader that has driven the EV transition from the start.
For Tesla, this is more than regulatory relief. It is a strategic tailwind that reinforces its position as America’s premier EV innovator at a time when domestic manufacturing and technological independence matter most.
Tesla Cybercab stands to gain from new rules that the Trump Administration is aiming to enforce on autonomous vehicles. On Thursday, NHTSA, under the Trump Administration’s U.S. Department of Transportation, commenced rulemaking on the Federal Motor Vehicle Safety Standards (FMVSS).
This effort aims to eliminate the mandate for manual brake pedals in vehicles that are designed to be driven exclusively by automated driving systems. This would impact the Tesla Cybercab, which the company has stated would operate without a steering wheel or pedals.
Tesla Cybercab launch is imminent after latest sighting at Giga Texas
The Trump Administration is looking to revise FMVSS No. 135, which requires standard braking systems on light-duty vehicles.
Currently, the regulation requires light-duty cars to use traditional manual braking systems that allow operators to slow the vehicle. With the advent of self-driving in the U.S., these regulations need updating, and these are the changes that could come to FMVSS No. 135:
- Removes requirements for hand- or foot-operated brake controls for vehicles designed never to be operated by a human. Existing rules still apply to AVs that retain manual controls.
- All subject vehicles must still meet the same stopping distance performance criteria via alternative testing procedures.
- While this update ensures AVs can physically stop when commanded, NHTSA is separately developing safety performance requirements for AVs in real-world driving scenarios.
- NHTSA will continue to use its broad defect enforcement authority to investigate unsafe ADS behavior and oversee recalls.
As autonomy becomes a greater part of passenger travel, these types of rule adjustments will be more than reasonable. It will give manufacturers the ability to self-certify their vehicles and avoid any red tape that could ultimately delay the deployment of these vehicles.
Administrators are also incredibly excited about the opportunity to play a role in the advancement of self-driving vehicles.
“We are at the cusp of the greatest technological revolution in vehicle technology since the innovation of the Model T,” NHTSA Administrator Jonathan Morrison said. “If we want America to lead the way, we have to reimagine our regulatory framework. That’s why under Secretary Sean Duffy’s AV Framework, NHTSA is tearing down pointless barriers to innovative designs while strengthening the fundamental safety requirements that matter and holding AV developers accountable for safe performance.”
The Cybercab entered mass production at Gigafactory Texas in April. Tesla ultimately plans to push the vehicle into its Robotaxi fleet, potentially when frameworks like these are established.
Tesla plans to boost production at its Gigafactory Berlin plant in Germany following a sharp rebound in sales and demand in Europe after a softer 2025.
The plans put Tesla in a better position to compete with strengthening companies in Europe and potentially other markets; demand indicators show Tesla is much better off than in 2025.
Last year was a tough year for Tesla in terms of overall demand in Europe. The company produced over 200,000 vehicles at the German plant last year, a soft figure compared to the 375,000 vehicles Tesla lists as its current capacity at the factory.
🚨 Tesla said this morning it will ramp up production at Gigafactory Berlin to a volume of 7,500 vehicles per week.
This is a 20 percent boost in production. Tesla will hire 1,000 new employees to help with the increase.$TSLA pic.twitter.com/kravKfRO5n
— TESLARATI (@Teslarati) June 25, 2026
Tesla’s overall European sales dropped significantly last year due to a variety of factors. However, sales are rebounding, and demand is strong once again, and only getting stronger. Tesla is now planning to bump production of Model Y vehicles at Giga Berlin upward by about 20 percent. It will also bring 1,000 new jobs to the plant.
Tesla confirmed the details of its planned production expansion in Germany this morning. It is a strategy to keep up with strengthening demand.
In Q1, Tesla saw a record 61,000 vehicles produced at Giga Berlin. European registrations rebounded sharply, with Model Y seeing 117 percent increases in March 2026 compared to last year. Germany alone saw stark increases, with a quadrupling in registrations to 9,252 units.
This trend continued in other key European markets, including France, Denmark and Sweden. Tesla registrations were up over 46 percent in some of these markets, and Model Y continued its trend as a top BEV in the market.
Demand has been recovering strongly in 2026, giving Tesla a reason to expand production efforts at the factory. These increases signal management’s confidence in sustained or growing European pull for Berlin-built vehicles.
One of Tesla’s biggest threats just got banned in the U.S.
Tesla Cybercab stands to gain from new Trump autonomy rules
