Saturday, July 13, 2024

In China, Elon Musk scores wins on the path to self-driving cars

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Elon Musk made progress towards rolling out Tesla’s advanced driver-assistance package in China on a whirlwind weekend trip to Beijing, sending the company’s shares up by almost 18% on Monday.

Key questions remain, however, on whether Tesla can secure government approvals to transfer data overseas that could prove pivotal in its development of autonomous vehicles.

Musk arrived in the Chinese capital on an unannounced visit on Sunday, intending to discuss the rollout of its Full Self-Driving (FSD) software and the data-transfer permissions, according to a person with knowledge of the matter.

During the trip, which was first reported by Reuters, Tesla won a key endorsement from a top Chinese auto association that said Tesla’s Model 3 and Y cars were compliant with data-security regulations. That would enable local governments to allow Tesla cars into parts of China they were previously barred from, Chinese media reported, citing a statement from Tesla.

Tesla has also reached an agreement with Baidu to use the Chinese giant’s mapping license for data collection on China’s public roads, according to two people, who described that as a step toward FSD rollout in China.

Festive offer

Musk’s meetings included one with Chinese Premier Li Qiang, who praised Tesla’s development in China.

Tesla did not comment for this report. Musk said this month on his social media site X that Tesla may make FSD available to customers in China “very soon”.

The question of whether Tesla can win Beijing’s approvals for overseas data transfer remains critical to its plans for FSD in China and for autonomous vehicles globally. Reuters could not determine what progress, if any, Musk made in securing such approvals during his Beijing trip.

Getting approvals in China to sell a so-called “level 2” driver-assistance system such as FSD isn’t the hard part. But Tesla has considered the ability to transfer data out of China pivotal to its development of autonomous vehicles.

Tesla and other automakers use the data provided by their cars to train autonomous driving systems to perform increasingly complicated tasks without supervision from a human driver. Without Beijing’s approval for data transfer, Tesla could not use data collected by its cars in China to develop autonomous cars for a global customer base.

Despite its name, Tesla’s Full Self-Driving vehicle is not fully autonomous and requires drivers to stay ready to take over.

Musk’s China trip marked the next step in a major pivot to Tesla’s strategy that has accelerated over a chaotic last few weeks for Tesla. The automaker rushed to prioritize its efforts to develop self-driving cars while putting its ambitions to become a mass-market seller of affordable electric vehicles on the back burner.

Reuters exclusively reported on April 5 that the automaker had scrapped plans for a next-general affordable car, widely called the Model 2, while continuing plans for robotaxis on the same new small-car platform.

Just a week before the Beijing trip, Musk abandoned a planned trip to India and a meeting with Prime Minister Narendra Modi, where he had been expected to discuss an investment including a new factory to build affordable Teslas.

The Indian government did not have an immediate comment on Musk’s China visit.

Prior to Monday’s share price jump, Tesla shares had lost about a third of their value this year as concerns have grown about its growth trajectory. Last week, Tesla reported its first decline in quarterly revenue since 2020.

Self-driving Competition

Equity analysts at Wedbush called the surprise visit “a major moment for Tesla” if Musk is able to obtain approval to transfer the China data overseas.

Chinese regulators has required Tesla to store all data collected by its Chinese fleet in Shanghai since 2021, leaving the company unable to transfer any back to the United States.

China’s complicated traffic conditions with more pedestrians and cyclists than in many other markets provide more scenarios that are key for training autonomous driving algorithms at a faster pace, according to industry experts.

Tesla cars have been banned from entering Chinese military complexes over security concerns relating to cameras installed on its vehicles. Its cars have also been turned away from sites holding important political events, such as an annual summer leadership conclave the ruling Communist Party held in 2022.

The endorsement from the Chinese auto group, which said Tesla complies with China’s data regulations, could allow Tesla cars to access such sites.

Rival Chinese automakers and suppliers such as XPeng and Huawei Technologies have been seeking to gain an advantage over Tesla by rolling out self-driving software of their own. He Xiaopeng, the CEO of XPeng whose XNGP Advanced Driver Assistance System is similar to FSD, said on his Weibo account he welcomed the entry of the Tesla technology into China.

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