Elon Musk secures initial approval for Tesla's Self-Driving Tech in Chinese Market
Elon Musk secures initial approval for Tesla's self-driving tech in Chinese Market following his surprise visit, leading to Tesla Inc. getting the green light from government authorities to implement its driver-support system in the world's largest auto market.
The American automaker was granted this approval on certain terms, as reported by a source familiar with the situation. The specifics of all the criteria are not entirely clear, but Tesla did overcome two crucial hurdles: striking a mapping and navigation deal with Chinese tech giant Baidu Inc., and satisfying requisites concerning data-security and privacy matters.
Tesla shares rose up to 9.9% in premarket US trading, while Baidu's stock climbed 2.4% in Hong Kong. Tesla has not yet responded to inquiries about the status of its efforts to secure regulatory consent.
These developments came after Tesla CEO Elon Musk made an unannounced trip to China on Sunday, striving for permission for driver-support software that could counteract the automaker's revenue deterioration. Despite Tesla's suite of features demanding constant monitoring and not rendering Teslas autonomous, the company charges $8,000 for these in the US, or offers a $99 monthly subscription.
Musk interacted with Premier Li Qiang on Sunday, who, as the Communist Party secretary for Shanghai, helped establish the company's primary global production plant. Musk's personal aircraft left Beijing on Monday, as documented by FlightRadar24.
While Tesla was initially warmly received in China, its prospects have dimmed of late as it confronts fiercer competition from domestic electric vehicle manufacturers spearheaded by BYD Co. Tesla's market share in China plummeted to about 6.7% in the fourth quarter of 2023, down from 10.5% in the first quarter of the preceding year, according to estimates by Bloomberg grounded on data from China's Passenger Car Association.
Advanced driver-support systems are increasingly prevalent in China, with numerous domestic players like Xpeng Inc. and Xiaomi Corp. promoting them as key features in vehicles. Automakers have also had success in selling driver-assist features at a premium, something Tesla could leverage after lowering prices to levels that might nullify its operational profit from the market.
Securing approval for Full Self-Driving in China could be a game-changer for Tesla, which encountered its first year-over-year quarterly revenue drop in 2020. Despite price cuts, the company sold fewer cars in the first quarter. Musk is trimming staff by at least 10% and looking to expedite new models, including more budget-friendly vehicles that could be ready by early 2025, possibly even sooner.
Musk's unanticipated trip to China stands out as a "watershed moment," according to Dan Ives, a senior equity analyst at Wedbush Securities 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."
Collaborating with Baidu, one of around only 20 accredited suppliers with the highest mapping qualifications in the country that can be integrated into driver-assistance functions, allows Tesla access to the Chinese firm's precise lane-level navigation and mapping services. Tesla has been utilizing Baidu for in-car mapping and navigation since 2020.
