Saturday, May 25, 2024

Why Tesla’s Elon Musk is lobbying Beijing to approve its self-driving car tech as part of his surprise trip to China

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Now, just over a week after Musk suggested that a China launch of Full Self-Driving “may be possible very soon,” Tesla may be on its way to unlocking its services in the world’s second-largest economy.

Musk made a surprise trip to China over the weekend, reportedly to lobby officials to approve Tesla’s Full Self-Driving service, the company’s assisted-driving technology, in China. (Despite the name, FSD is not fully autonomous, requiring constant driver supervision). In the U.S., Tesla charges either an upfront cost of $8000 or a monthly subscription of $99 for FSD.

Shortly after Musk’s meeting with Chinese officials, the China Association of Automobile Manufacturers (CAAM) announced that two China-made Tesla models comply with the country’s data security requirements. Chinese brands like Nio, BYD and Li Auto also passed the data security test. 

The announcement could help pave the way for a Chinese launch of FSD, alleviating government concerns about data security. Tesla uses cameras to operate its assisted-driving software; some Chinese officials have barred Tesla EVs from government sites due to fears that data collected from Tesla cars might leak overseas. The company has stored all data collected from its Chinese fleet in Shanghai, since 2021. 

Then, on Monday, Bloomberg reported that Tesla will use mapping software from Chinese tech firm Baidu, a necessary step for the company to get permission to operate its assistance-driving software in China. Tesla fleets will now be able gather data on their surroundings, like road layouts, according to Reuters.

Musk may even have gotten an official sign-off: The Wall Street Journal reported Monday that Chinese officials have given tentative approval for an FSD launch.

China slowdown

The Tesla CEO’s trip to China comes as its sales in the country drop to their lowest point since 2022. The company reportedly cut working hours for its employees at its Shanghai Gigafactory. 

Tesla is pressured by Chinese EV startups like Xpeng, Nio and BYD, the latter of which briefly became the world’s top seller of battery electric vehicles last year. And despite intense competition, new companies are still trying to enter the sector, like smartphone manufacturer Xiaomi.

Tesla has not released a new car model since 2020, and so the company has resorted to aggressive price cuts to beat back competitors. That’s put pressure on the company’s margins, with net profit falling 55% year-on-year in the first quarter of 2024. 

Yet some of Tesla’s Chinese competitors are now trying to compete on services. Xpeng, Nio and Li Auto have all touted their autonomous driving features and made strong commitments to continue investing in the technology. 

Musk, too, has been doubling down on assisted-driving as part of Tesla’s future plans. The company will unveil a robo-taxi on Aug. 8, Musk claimed earlier this month on X.

Last week, Musk told analysts that they shouldn’t think of Tesla as a car company, and tied the company’s success to autonomous driving. “If somebody doesn’t believe Tesla is going to solve autonomy, they should not be an investor in the company,” Musk said at the time.

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