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As Musk visits China in surprise visit, Tesla wins data security clearance

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By Bloomberg News


Tesla Inc.’s locally made cars have cleared a key data security and privacy requirement in China in a boost for Elon Musk, who made a surprise weekend visit to Beijing to try to win approval to introduce driver-assistance software that could help arrest the automaker’s sales decline. 


The data security tests included how a vehicle collects “sensitive personal information” and whether a driver can easily stop a car from collecting data, the China Association of Automobile Manufacturers said in a statement late Sunday. Tesla’s cars have been banned from Chinese military compounds and some other government venues in the past over data-collection concerns. 

Musk arrived in China on Sunday and met with Premier Li Qiang, who as the Chinese Communist Party secretary for Shanghai helped the company set up what is now its top plant globally.

Musk was expected to meet officials about rolling out the system Tesla markets as Full Self-Driving, or FSD, a person with knowledge of the matter said. While the suite of features require constant supervision and don’t make Teslas autonomous, the company generates incremental sales in the US by charging $8,000 to buy FSD outright, or $99 a month for a subscription.

The visit is “a watershed moment,” Wedbush Securities senior analyst Dan Ives said in an interview with Bloomberg Television. “This could open up FSD in China, which I view as unlocking what really could be the golden opportunity for them when it comes to FSD and autonomous in China, which has been a missing piece in the puzzle.”

Moves toward approving FSD would extend the warm welcome Musk has usually received in China. The only wholly foreign-owned automaker in China, Tesla was granted a slew of incentives when building its Shanghai factory, including preferential loans, and unrivaled administrative approval speed. It also got special aid during Covid lockdowns, and was able to quickly ramp up production at the plant, which now accounts for over half its global deliveries. 

Still, facing tougher competition from domestic carmakers like BYD Co., Tesla’s share of the world’s biggest auto market shrank to around 6.7 per cent in the fourth quarter of 2023, from 10.5 per cent in the first quarter of last year, according to Bloomberg calculations based on China’s Passenger Car Association data.

Tesla is coming off its first year-over-year decline in quarterly revenue since 2020, having sold fewer cars even after slashing prices. The company is cutting headcount by at least 10 per cent and looking to accelerate new models, including less-expensive vehicles, that could be ready by early 2025, if not before year-end, Musk said last week.

First Published: Apr 29 2024 | 10:06 AM IST

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