Elon Musk will do it Rejoice that his surprise trip to China made plenty of glowing headlines on Sunday. The trip was also undoubtedly a surprise for Indian Prime Minister Narendra Modi, who was due to give Musk the red carpet on a long-arranged visit.
The billionaire turned down India at the last minute, citing “very high Tesla commitments.” In fact, Tesla has had a tumultuous few weeks, with major blows from federal regulators, profits halved and the introduction of price cuts – but in a very public snub that Modi won’t soon forget, the company’s CEO made time for the Chinese premier Li Qiang.
And well, Musk could do it too. Tesla needs China more than China needs Tesla. After the USA, China is Tesla’s second largest market.
Worryingly, however, Tesla’s sales in China fell 4 percent in the first quarter of the year, while the domestic electric vehicle market grew by more than 15 percent. That’s enough of a hit for any CEO to jump into a Gulfstream and fly across the Pacific to an impromptu meeting with a Chinese prime minister.
Tesla almost lost worldwide a third of its value Since January and earlier this month, Tesla’s global vehicle deliveries fell in the first quarter for the first time in nearly four years. As usual, Tesla investors continue to complain about repeated delays in the company’s introduction of cars with true autonomous features.
One of Tesla’s stopgap technologies — a now heavily discounted $8,000 add-on — is marketed as Full Self-Driving, or FSD. But like the similarly confusingly named Autopilot feature, this one requires the driver’s attention and can still prove risky.
Among the agreements reportedly announced at the meeting with Li Qiang on Sunday was a partnership that would give Tesla access to a mapping license for data collection on China’s public roads through web search company Baidu.
This is a “watershed moment,” said Dan Ives, senior analyst at Wedbush Securities, in an interview with Bloomberg Television. However, Tesla has been using Baidu for in-car mapping and navigation in China since 2020. The revised contract, in which Baidu now also provides Tesla with its lane navigation system, clears another regulatory hurdle for Tesla’s FSD in China. It does not allow Tesla to introduce self-driving cars in China or elsewhere, as some media outlets have reported.
Press reports also claimed that Musk had secured permission to transfer data collected from Tesla cars in China out of China. This is unlikely, said Junheng Li, CEO and head of research at L Warren Capital wrote on X: “[Baidu] owns all data and shares filtered data with Tesla. Imagine if [Tesla] has access to real-time road data, e.g. B. who went to the embassy of which country, at what time and for how long.” That, she emphasized, would be “supernational security”!
According to Reuters, Musk is still seeking final approval to launch the FSD software in China, and Tesla still needs permission to transfer data abroad.
Li added that the launch of even a “supervised” Data Lite version of FSD in China was “extremely unlikely.” She noted the challenges for Tesla in supporting local operation of the software. Tesla still has “no [direct] “Accessing card data in China as a foreign company,” she wrote.
Instead, Tesla is likely using the contract extension with Baidu as an FSD workaround, with data collected in China largely remaining in China. Still, Tesla shares surged following news of the expanded Baidu collaboration.
Additionally, Li said there is “no strategic value” for Beijing to favor FSD when there are several more advanced Chinese alternatives. We tested them.
“Chinese electric vehicles are just developing much faster than Tesla,” agrees Shanghai-based automotive journalist and WIRED contributor Mark Andrews, who has tested driver-assistance technology available on China’s roads. The US-listed trio of Xpeng, Nio and Li Auto offer better “driving assistance features” than Tesla, relying heavily on lidar sensors, a technology that Musk had previously rejected but that Tesla is now reportedly testing.
Although a Tesla car is outdated in its condition and does not have the latest technology, it is still more expensive than most of its competitors in China. Tesla recently cut prices in China to stem declining sales.
Musk’s visit to China smacked of “desperation,” says Mark Rainford, owner of the channel Inside China Auto. “[Tesla] Sales are declining in China – the competition has so far survived the price cuts and [the Tesla competitors have] a seemingly endless conveyor belt of talented and beautiful products.” Rainford further warns that the “golden period for Tesla in China” is in “great danger of collapse.”
Tesla opened its first Gigafactory in Shanghai five years ago and is now the company’s largest – but the car manufacturer has been catching up technologically in China for some time. In addition to Xpeng, Nio and Li, there are other Chinese automakers that are a step ahead of Tesla when it comes to autonomous driving, as Musk will see when he visits the Beijing Motor Show this week.
Beijing is now arguably the world’s most important auto show, but Tesla isn’t exhibiting, a sign that it has little new to offer the notoriously tech-hungry Chinese car buyers. The Cybertruck is explicitly not road legal in China, but that hasn’t stopped Tesla from displaying the rust-prone electric pickup in some of its Chinese showrooms.
Likewise, Tesla just announced plans for one European Cybertruck Tour. But just like in China, the electric pickup cannot be sold in the EU – and given Tesla’s lead in vehicle development, this probably never will be the case.
Lars Moravy, vice president of automotive engineering at Tesla, spoke about stricter pedestrian safety regulations in the EU compared to the US Top equipment that “European regulations require an external radius of 3.2 mm for external projections. Unfortunately, it is impossible to produce a 3.2mm radius on a 1.4mm stainless steel sheet.”
The “Cybertruck Odyssey” tour – like Tesla’s European