Tesla has cleared some key regulatory hurdles that have long prevented it from launching its self-driving software in China, paving the way for a favorable outcome of Elon Musk's surprise visit to the carmaker's second-largest market of American automobiles.
Tesla CEO Musk arrived in the Chinese capital on Sunday where he was expected to discuss the deployment of full autonomous driving (FSD) software and permission to transfer driving data abroad, according to a person with knowledge of the matter
The billionaire's whirlwind visit, during which he met Chinese Premier Li Qiang, came just over a week after he scrapped a planned trip to India to meet Prime Minister Narendra Modi, citing “Tesla's very heavy obligations.”
On Monday, two separate sources told Reuters that Tesla had reached an agreement with Baidu to use the Chinese tech giant's mapping license for data collection on China's public roads, which they described as a key step to introduce FSD in the country.
And a Chinese auto association said Sunday that Tesla's Model 3 and Y cars were among the models it had tested that met China's data security requirements.
Safety and data compliance have been key reasons why the US electric vehicle maker, which released the most autonomous version of its Autopilot software four years ago, has not yet made FSD available in China, its second largest market globally, despite customer demand.
Since 2021, Chinese regulators had required Tesla to store all data collected by its Chinese fleet in Shanghai, and the company could not transfer any of it to the United States.
Musk is seeking approval to transfer data collected at home abroad to train algorithms for his self-driving technologies, the person said.
Musk's visit to China, first reported by Reuters, was not publicly marked and the person spoke on condition of anonymity because he was not authorized to speak to the media.
The plane Musk arrived on left Beijing Capital Airport at 05:17 GMT, according to Chinese flight-tracking app Flight Manager, and headed for Anchorage, Alaska.
Tesla did not immediately respond to a request for comment on Musk's departure.
Equity analysts at Wedbush called the surprise visit “an important moment for Tesla.”
Rival Chinese automakers and suppliers such as XPeng and Huawei Technologies have been looking to gain an edge over Tesla with similar software.
Retired newspaper commentator Hu Xijin said on his Weibo account that Tesla was the only foreign-funded carmaker to meet China's data compliance requirements and said this would pave the way for the Tesla cars enter facilities owned by government agencies and state-owned enterprises across China. .
“This is not only a breakthrough in China, but also an important demonstration for the whole world in solving data security problems,” he said.
Premier Li on Sunday praised Tesla's development in China as a successful example of US-China economic and trade cooperation.
Data from China
For years, Tesla cars have been banned from entering Chinese military compounds due to security concerns related to the cameras installed in their vehicles. Their cars have also been removed from venues where they hold major political events, such as an annual summer leadership conclave the ruling Communist Party is holding in 2022.
He Xiaopeng, the CEO of XPeng whose advanced driver assistance system XNGP is similar to FSD, said on his Weibo account that he welcomed the entry of Tesla technology into China.
“Only with the entry of more good products and technologies can the experience of the entire market and customers be improved, and will allow the development of the market to accelerate in a healthy way,” he said.
“Let a hundred flowers bloom,” he said, echoing a famous line by Chairman Mao Zedong, the founder of modern China.
The improved outlook for FSD's entry into China comes as Tesla shares have lost nearly a third of their value since the start of the year as concerns have grown about the carmaker's growth trajectory electric Last week, Tesla reported its first drop in quarterly revenue since 2020 as the COVID-19 pandemic slowed production and deliveries.
Musk said last week that Tesla would introduce new, cheaper models using its current electric vehicle platforms and production lines and offer a new “robotaxis” with self-driving technology. It told X this month that it would introduce the robotaxi on August 8.
According to industry experts, China's complicated traffic conditions with more pedestrians and cyclists than in many other markets provide more key scenarios for training autonomous driving algorithms at a faster pace.
“If Musk is able to get Beijing's approval to transfer data collected in China overseas, that would be a 'game changer' around accelerating the training of its algorithms for its autonomous technology globally,” Wedbush analyst Dan Ives said in a note.
Musk said this month that Tesla may make FSD available to customers in China “very soon,” in response to an inquiry from X.
In addition to meeting Li on the short trip to Beijing, Musk met the organizer of the ongoing Beijing auto show. The chairman of Chinese battery giant CATL, Robin Zeng, a key battery supplier to Tesla, also visited Musk's hotel on Monday, according to a Reuters witness. Reuters could not immediately confirm with CATL whether Zeng met with Musk.
Musk had prepared on his canceled trip to India to announce between $2 billion and $3 billion in new investments, including in a car factory, after India offered lower import taxes to electric vehicles in exchange for a new policy.
© Thomson Reuters 2024
