(Bloomberg) — Elon Musk’s surprise visit to China appears to have paid off immediately: Tesla Inc. has cleared two key hurdles to introduce its driver-assistance system in the world’s largest auto market.
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The U.S. electric car maker will partner with Chinese tech giant Baidu Inc. for mapping and navigation capabilities to implement so-called “full self-driving,” people familiar with the matter say. Tesla has also met an important data security and privacy requirement in China, which would help address some of the concerns about its data security issues.
The moves come after Tesla CEO Elon Musk made an unannounced trip to China on Sunday to seek approval for driver assistance software that could help arrest the automaker’s declining sales. While the feature set requires constant monitoring and doesn’t make Teslas autonomous, in the US the company charges $8,000 to purchase FSD outright or $99 per month for a subscription.
Read more: Musk makes surprise visit to China in search of Tesla sales boost
Musk met on Sunday with Prime Minister Li Qiang, who, as Chinese Communist Party secretary for Shanghai, helped the company build what has become its world-leading factory.
While Tesla initially received a red carpet welcome in China, its success has waned recently as the company faces tougher competition from domestic electric vehicle makers such as BYD Co. and Li Auto Inc. Tesla’s share of China’s auto market shrank to about 6.7% in the fourth quarter of 2023, down from 10.5% in the first quarter of last year, according to Bloomberg calculations based on data from the China Passenger Car Association.
Advanced driver assistance systems are becoming increasingly common in China, and many local players including Xpeng Inc., Xiaomi Corp. and Huawei Technologies Co., use such features as a selling point for vehicles.
The company also posted its first year-over-year decline in quarterly sales since 2020 as it sold fewer cars despite price cuts. The company is cutting headcount by at least 10% and trying to push forward new models, including cheaper vehicles, that could be ready in early 2025, if not before the end of the year, Musk said last week.
Musk’s surprise visit to China is “a game-changer,” said Dan Ives, senior analyst at Wedbush Securities, in an interview with Bloomberg Television. “This could open up FSD in China, which I think could be a really golden opportunity for them when it comes to FSD and autonomy in China, which has been a missing piece of the puzzle.”
While getting the green light for FSD in China could help Tesla make up for lost ground, the system has proven problematic in the US. The top U.S. auto safety regulator just opened an investigation into the company’s less capable Autopilot system, pointing to 20 accidents that have occurred since December involving vehicles that had an over-the-air had received a software update.
In a conference call last week, Musk emphasized the importance of autonomous driving to Tesla’s future and said that people who doubt the company’s ability to “solve” the autonomy problem should not invest in it.
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