Tesla, the American electric vehicle giant, has taken a significant step toward introducing its advanced driver assistance system in China, the world’s largest auto market. The company has received approval in principle from Chinese government officials to deploy its Full Self-Driving (FSD) service, albeit under certain conditions. This development comes on the heels of Tesla CEO Elon Musk’s surprise visit to China, where he met with Premier Li Qiang in Beijing.
One of the key hurdles Tesla had to overcome was reaching a mapping and navigation deal with Chinese tech giant Baidu. By partnering with Baidu, Tesla can tap into the company’s lane-level navigation and mapping services, which are essential to the proper functioning of the FSD system. This collaboration also helps address data security and privacy concerns, as Tesla won’t have to map China’s roads and collect the related data itself.
According to a person familiar with the matter, Tesla has managed to meet the requirements for handling data security and privacy issues. The company’s locally manufactured Model 3 and Model Y vehicles have passed key data security tests in China, as confirmed by the China Association of Automobile Manufacturers (CAAM). This is a significant development, as Tesla’s cars have been banned from certain government-related facilities since at least 2021 due to security concerns about the cameras installed on the vehicles and the data they collect.
Musk’s visit to China, which included a meeting with Premier Li Qiang, who played a key role in establishing Tesla’s Gigafactory in Shanghai when he was the city’s party secretary, appears to have helped clear these hurdles. The approval of the FSD in China is a major boost for Tesla as it faces increasing competition from domestic EV manufacturers such as BYD, Xpeng, and the Huawei-backed Aito brand.
Tesla’s fortunes in China have waned recently, with its market share shrinking from 10.5% in the first quarter of 2022 to around 6.7% in the fourth quarter of 2023. The company has had to lower prices to remain competitive, which could affect its operating profit in the market. The introduction of FSD could help Tesla regain some of its lost ground, as advanced driver assistance systems are becoming increasingly common in China, with many local players using them as a selling point for their vehicles.
In the United States, Tesla charges $8,000 for its suite of driver-assistance features or offers a subscription for $99 per month. While these features require constant supervision and do not make Teslas fully autonomous, the company could potentially charge extra for them in China, helping to offset the impact of recent price cuts.
However, Tesla’s driver assistance systems have faced challenges in the U.S., where the top auto safety regulator recently opened an investigation into the company’s less capable Autopilot system. The investigation was prompted by 20 crashes since December involving vehicles that had received an over-the-air software update to prevent misuse.
Despite these challenges, Musk remains confident in Tesla’s ability to “solve” autonomy, emphasizing the importance of autonomous driving development during a recent earnings call. He even went so far as to say that people who doubt Tesla’s ability in this area shouldn’t invest in the company.
As Tesla moves forward with its plans to introduce FSD in China, the company will need to navigate a complex regulatory landscape and address any potential concerns that may arise. However, with the support of local partners like Baidu and the backing of the Chinese government, Tesla is well positioned to capitalize on the growing demand for advanced driver assistance systems in the world’s largest automotive market.