Tesla’s China-built cars put Korean FSD sales in question

A South Korean consumer group plans to ask the Korea Fair Trade Commission (KFTC) to halt Tesla’s marketing of Full Self-Driving (Supervised) on 5 November, alleging that the company sold the software to tens of thousands of buyers whose cars cannot legally use it. The root of the problem is less the software than Tesla’s supply chain: most of the cars it sells in the country are built in Shanghai, and only US-built vehicles qualify for legal use under current regulation.

Tesla Korea country manager Seo Young-deuk told a parliamentary hearing last month that FSD can run on only around 20% of the Tesla vehicles registered in South Korea, namely those built in the US to safety standards recognised under the two countries’ free trade agreement. No equivalent arrangement covers China, which has supplied more than 170,000 Teslas to South Korea since 2023. China’s share in Korean Tesla sales is also growing: 99% of the brand’s new South Korean sales last year could not legally use FSD.

The self-driving system is not cheap, and Tesla has had no qualms about selling the software despite Korea’s regulatory limitations. Indeed, the automaker charged lump sums of KRW 9.04m (US$6,726) for the software for years before activating it late in 2025, before switching to a KRW 150,000 monthly subscription the following August and abandoning lifetime ownership entirely. 

“Tesla generated substantial revenue by selling an expensive driver-assistance system to mass-market buyers who cannot use it for even a single day,” said Choi Young-suk, who leads automotive issues at Citizens United for Consumer Sovereignty, in comments seen by Reuters. The group is seeking a temporary cease-and-desist order, administrative fines and a referral to state investigators.

Tesla’s own regulatory record weakens its position. Seo testified on 8 October that the automaker had never formally requested FSD testing from the transport ministry, and Tesla applied for certification only two weeks later. The ministry has since said that the system breaches local safety rules, including the requirement to keep hands on the wheel, so certifying China-built cars may not, by itself, even solve the problem.

Still, customers face a difficult road ahead seeking compensation. October also saw a Seoul court dismissing an owners’ refund suit, ruling that regulatory and legal restrictions had limited Tesla’s ability to roll out further functions. That reasoning may nevertheless work against Tesla at the KFTC, which opened its own probe into FSD advertising earlier in 2026. The complaint argues Tesla knew those restrictions yet promoted FSD as “coming soon” with a demonstration video filmed in South Korea. The commission previously fined Tesla KRW 2.85bn in 2023 for overstating cold-weather range and Supercharger speeds.

South Korea is the latest in a run of jurisdictions challenging the gap between Tesla’s branding and what its SAE Level 2 system is either permitted to do, or perhaps even capable of doing. In 2025, China forced a rebrand to “Intelligent Assisted Driving”, and the automaker now faces a fraud lawsuit over unmet promises. A Munich court has banned terms such as “Autopilot Included”, while the California DMV has pursued false-advertising complaints, prompting the abandonment of the Autopilot brand entirely. 

Even Tesla’s European breakthrough, courtesy of the Dutch RDW, came at the cost of renaming the system Tesla Assisted Driving in local interfaces and sharply limiting speed-limit offsets. In the US, the FSD branding endures, but the appended “(Beta)” was eventually replaced with the more anodyne and cautious “(Supervised)”.

The cumulative effect is a steady global retreat from Tesla’s own terminology. “Full Self-Driving” has already given way to local alternatives in China and the Netherlands, and an adverse KFTC ruling would add another major market where the name itself is a regulatory liability rather than a selling point.