Tesla’s stock soared on Monday after reports emerged that CEO Elon Musk had obtained Chinese approval to deploy the company’s “Full Self-Driving” (FSD) software in the country. This news came during Musk’s visit to Beijing over the weekend, where officials tentatively approved the FSD technology. To bolster its efforts in China, Tesla will be using Baidu’s street-level mapping data to power FSD. This collaboration with a Chinese tech company not only helps with regulatory approval but also addresses concerns regarding data privacy and security risks.
The positive response from investors resulted in Tesla’s stock closing up by 15.3%, reaching its highest levels since March 1. In fact, the stock has risen by almost 40% in the past four trading sessions. While pricing details for FSD in China were not disclosed, in the United States, Tesla charges an upfront fee of $8,000 for lifetime use or a monthly subscription fee of $99.
The approval of FSD in China is significant for Tesla, as it not only brings in additional revenue but also strengthens its competitive advantage against rivals like NIO, Li Auto, XPeng, and even tech giants like Xiaomi, which are entering the auto market with their own semi-autonomous software. Leland Miller, a China expert from China Beige Book, emphasizes the importance of Tesla maintaining its position as the most technologically advanced solution in order to stay ahead of its competitors.
The lack of FSD features in Tesla cars likely affected sales in China, where consumers prioritize the latest tech advancements. Despite aggressive price cuts, Tesla’s market share in China dropped from 10.5% in the previous year to 6.7% in the fourth quarter of 2023, according to China’s Passenger Car Association. Globally, Tesla’s deliveries in the first quarter fell from 423K units last year to 387K units.
Obtaining preliminary approval for FSD in China and securing a data deal with Baidu are significant victories for Tesla. Analyst Dan Ives from Wedbush describes Musk’s achievement as a “watershed moment” for Tesla, emphasizing the importance of making FSD available in China. The focus on autonomous driving and the potential for a robotaxi future are considered long-term catalysts for Tesla’s success.
One crucial aspect of developing Tesla’s AI-powered autonomous software is the collection of vast quantities of data, which is vital for training its algorithms. Since 2021, Tesla has been storing its data in China due to regulatory requirements. However, gaining approval to transfer this data from China to its US-based servers will accelerate the global training of Tesla’s autonomous technology.
Interestingly, the Chinese government’s promotion of self-driving in various localities may lead to a higher adoption rate and frequency of FSD usage among Chinese users. This will provide Tesla with more data to enhance its FSD software and improve its autonomous capabilities.
In conclusion, the approval of Tesla’s FSD software in China and the collaboration with Baidu for mapping data marks a significant milestone for the company. As Tesla continues to innovate in the autonomous driving space, it must maintain its position as the leader in technological advancements to stay ahead of its competitors. The ability to migrate its data from China to the US will further accelerate the development of Tesla’s autonomous technology on a global scale.