On April 29th, Elon Musk arrived in Beijing seeking approval from Chinese regulators for Tesla's cutting-edge driving assistance technology. China is Tesla's largest overseas market, but it is gradually falling behind in competition with local electric vehicle manufacturers.
Musk is intensifying efforts globally to accelerate the widespread adoption of Tesla's "Full Self-Driving (FSD)" software. However, the world's most valuable carmaker had a poor performance earlier this year, with profits in the first quarter dropping to the lowest level since 2021.
Sources revealed that Musk is currently working on persuading Chinese regulators to greenlight the FSD feature for Chinese drivers. Although Tesla has already launched FSD subscription services in China, its autonomous driving capabilities are still at a lower level, putting Tesla at a disadvantage in competition with some Chinese electric vehicle brands.
In China, Tesla faces restrictions on data collection near sensitive locations and is not allowed to transfer data from China to overseas. Musk hopes to transfer this data to the US to build a larger database for more effective training of driving assistance features. However, given that China views the protection of such data as a national security issue, Musk's goal undoubtedly faces significant challenges.
If Tesla's FSD fails to get approval, its appeal in the world's largest electric vehicle market could be greatly diminished. Last week, Tesla halved the price of FSD in the US to attract more users. However, last Friday, the US National Highway Traffic Safety Administration (NHTSA) launched an investigation into Tesla's basic version of the Autopilot driving assistance system, linking the system to several avoidable accidents and fatalities. Tesla has not responded to this investigation yet.
Against the backdrop of declining consumer demand for electric vehicles, Tesla is facing increasing challenges. Following a sharp drop in revenue and profits in the first quarter of this year, the company has cut over 10% of its workforce globally.
In the last quarter, Tesla's car sales in China dropped by nearly 4% year-on-year, while other electric vehicle markets saw a 15% growth.
Workers at the Tesla Shanghai factory revealed on Sunday that they were asked to work overtime over the weekend in anticipation of Musk's visit to China. The factory typically follows the practice of weekend rest, but due to weak market demand, Tesla reduced production shifts in March.
Last week, Musk adjusted his schedule temporarily, postponing his visit to India. He had planned to meet with Indian Prime Minister Narendra Modi and announce Tesla's strategic plans for entering the Indian market.
During the meeting on Sunday, Chinese officials conveyed positive signals to Musk, emphasizing that Tesla's development in China is a model of Sino-US economic and trade cooperation. Musk responded by stating that Tesla is willing to deepen cooperation with China further.
The meeting brought together key figures from Tesla in China, including executive Zhu Xiaotong, seen as crucial for Tesla's growth in China, and Vice President Tao Lin, responsible for Tesla's external affairs in China.
Tesla's high market value largely hinges on the bright prospects of its driving technology. The FSD system is an advanced version of the company's autonomous driving technology designed to assist in tasks like steering and lane changes.
During last week's Tesla earnings call, Musk stated, "Subject to regulatory approval, we plan to roll out this regulated autonomous driving system in any market, including China." He also revealed that Tesla's latest version of the autonomous driving system is fully based on artificial intelligence, with the company working to expand its core AI infrastructure and training capabilities.
Tesla's CFO Vaibhav Taneja emphasized during the meeting that investors should view Tesla as an innovative company beyond the traditional automotive realm.
Tesla states on its official website and user manuals that the FSD software does not support fully autonomous driving and requires continuous attention and active supervision from the driver.
Tesla primarily relies on real-time visual data captured by its car cameras to power its driving assistance features, rather than using laser radar signals for traffic recognition, a different technological approach from most Chinese automakers. Earlier this month, Huawei also introduced camera-based autonomous driving technology, claiming its technology surpasses Tesla's most advanced autonomous driving features currently available in China in terms of intelligence and functionality.
Previously, China had explicitly prohibited Tesla vehicles from entering sensitive areas, sometimes including government agencies, airports, train stations, and police station public parking lots. However, according to the latest news, on Sunday night, domestically produced Teslas passed the authoritative standards and requirements for national vehicle data security. Analysts suggest that this development will help gradually lift restrictions on Tesla's driving and parking in China.
In recent years, due to concerns about the potential cybersecurity risks of accumulating vehicle data, China has mandated that all relevant data be stored domestically. Tesla has stated that all data generated by cars sold in the Chinese market will be stored in a local data center established in 2021.
To further enhance the performance of its FSD and better adapt it to China's traffic environment, Tesla needs to collect data locally in China to assist in training and optimizing this technology.
Tao Lin previously stated that autonomous driving technology is a key growth engine for the electric vehicle industry. She explained that Tesla's leading position in autonomous driving technology is due to its powerful computing capabilities, large fleet size, rich data resources, and diverse vehicle models. Additionally, she emphasized that Musk has publicly expressed willingness to license Tesla's driving assistance features to other automakers multiple times.
