Tesla received some encouraging news during CEO Elon Musk’s two-day visit to China, overcoming a major data security hurdle and sealing a deal to use maps created by China’s biggest search engine, moving it one step closer to being able to use its Autopilot technology in the country.
Both were positive developments for Tesla, which reported a steep plunge in profits last week, as it tries to convince Chinese regulators that its Full Self-Driving (FSD) software is safe for use — despite repeated crashes in the United States.
Beijing has been cautious about FSD, both because of safety concerns — three people were killed in China on Friday in an apparent autopilot accident involving an SUV made by a domestic company — and because it wants to ensure local carmakers aren’t left behind.
Tesla has reached a deal with search giant Baidu to use its street-level mapping data in China, a person familiar with the agreement said, speaking on the condition of anonymity to discuss a sensitive business decision. This comes with a credential of the highest level of surveying and mapping qualifications, clearing a key obstacle to later approval from the government, the person said.
Bloomberg News first reported that Tesla had struck a partnership deal with Baidu, clearing a key regulatory hurdle for Tesla to offer its driver-assistance system in China. Under the deal, Tesla will deliver its autonomous driving services based on Baidu’s mapping and navigation functions.
That came as all cars produced in Tesla’s Shanghai Gigafactory were declared to be compliant with the country’s data security requirements.
The government-backed China Association of Automobile Manufacturers said it will allow Tesla vehicles to park or drive near government- and military-related properties. Teslas had previously been banned from such areas, with officials citing potential security risks and concerns over what data the carmaker could collect. Those fears have now apparently been assuaged.
The green light on data security could signal a change, some experts said.
“Data compliance was once the most outstanding restriction faced by Tesla,” said Qiu Kaijun, a Chinese automotive industry analyst. “Now that has been cleared, I see no major hurdles policy-wise for Full Self-Driving’s entry to the Chinese market.”
Musk sat down Sunday with Premier Li Qiang, who was in charge of Shanghai in 2018 when Tesla became China’s first wholly foreign-owned automaker and opened a sprawling manufacturing base in the Chinese financial center. Li, a loyal lieutenant of top leader Xi Jinping, had previously called the Tesla founder an “old friend.”
At a state guesthouse reserved for foreign government leaders and some of Beijing’s most important guests, a smiling Li told Musk that Tesla’s Gigafactory in Shanghai had been a “paradigm of success” for foreign enterprises in China, according to state media.
The Chinese Foreign Ministry and state media didn’t confirm whether Musk raised the issue of the FSD system. But the vice president for Tesla China, Grace Tao, wrote on social media that Musk told Li about his expectations for autonomous driving and artificial intelligence.
A display for Tesla at the 2022 China International Fair for Trade in Services in Beijing. (Mark Schiefelbein/AP)
Earlier this month, Musk wrote on X, the social media platform he owns, that the FSD rollout could happen “very soon.”
Media outlets reported Monday that Tesla had made progress on these issues during Musk’s visit.
Chinese officials had “tentatively approved” the company’s request to launch its FSD software in the country, the Wall Street Journal cited an anonymous source in saying.
The first hint that the Chinese government was reviewing Tesla’s request favorably came a year ago, when Chen Kele, the deputy director of Shanghai’s intelligent manufacturing promotion division, told state media that the municipal government would boost ties with Tesla in bringing autonomous driving and robot modules to Shanghai.
While the progress does not give Tesla immediate access for FSD, it is “at least a display of confidence” from Beijing, said Qiu, the analyst, adding that a partnership with a Chinese company may help alleviate security concerns.
But others said that regulators in Beijing had little incentive to facilitate a fast rollout by a foreign company when rival Chinese automakers, such as Xpeng, are trying to gain an advantage over Tesla by releasing similar software.
“There’s no strategic value” for Beijing to support FSD’s domestic rollout when there are high-quality domestic alternatives, tech analyst and equity researcher Junheng Li said on X.
There are still plenty of doubts about the reliability of self-driving software. Crashes in China and the United States have raised alarms about safety and prompted regulators to go slowly.
After a two-year investigation into Tesla’s Autopilot, the U.S. National Highway Traffic Safety Administration identified hundreds of crashes — 13 of them fatal — and is now reviewing whether Tesla’s fixes during the December recall of 2 million vehicles went far enough.
Tesla insists that drivers are solely responsible for crashes, but lawsuits — and a federal investigation — contend that Tesla exaggerated the capabilities of the Autopilot feature, creating a false sense of complacency that led drivers to tragedy.
In China, electric car companies are also reeling from a series of deadly crashes associated with autopiloting mode.
A Chinese-made AITO M7 electric SUV, powered with Huawei’s autopiloting technology, crashed into a sprinkler truck on a highway on Friday in Shanxi, killing all three passengers, including a 2-year-old boy. Seres, the Huawei-backed carmaker, said it is cooperating with police for an investigation into the case.
Tesla’s sales in China are dwindling in the face of intense competition from domestic rivals. Tesla accounted for 3.7 percent of total car sales in China last month, almost one-fifth lower than in March of last year, according to the latest data from the China Passenger Car Association.
Christian Shepherd in Beijing and Pei-Lin Wu and Vic Chiang in Taipei, Taiwan, contributed to this report.
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