"Elon Musk met with senior Chinese officials in Beijing on Sunday as he pushes for approval to introduce Tesla's advanced driver-assistance technology in its biggest overseas market, where it has been losing ground to homegrown electric-vehicle makers.
Musk is stepping up efforts globally for wider adoption of Tesla's "Full Self-Driving," or FSD, software feature after a dismal start to the year for the world's most valuable automaker, which saw its first-quarter profit drop to its lowest level since 2021.
Tesla's chief executive is seeking to persuade Chinese regulators to greenlight the introduction of its FSD feature to Chinese drivers, according to people familiar with the discussions.
Among those he met was Chinese Premier Li Qiang.
Tesla has opened FSD for subscription in China, but it only provides lower-level autonomous features for use, leaving it lagging behind EVs made by some Chinese brands that can drive near-automatically in most scenarios.
In China, Tesla faces government restrictions over the data its cars can collect near sensitive sites, and it isn't allowed to transfer its Chinese data out of the country. Musk would like to transfer data to the U.S. to create a bigger pool that could better train the driver-assistance feature, the people said. That is a potentially thorny issue given Beijing regards protecting such data as a matter of national security.
Failure to win approval for FSD could erode the attractiveness of Tesla cars in the world's most crowded EV market. Tesla last week halved the subscription price of FSD in the U.S. to entice adoption. On Friday, the National Highway Traffic Safety Administration opened an investigation into Tesla's more basic driver-assistance system, which the authority said is tied to avoidable crashes and fatalities. Tesla didn't respond to a request for comment on the probe.
Tesla faces mounting challenges amid a cooling in consumer demand for EVs. It is cutting more than 10% of the global workforce after it reported falling revenue in the first quarter of the year and a sharp drop in profit.
Tesla's sales in China of its vehicles made in the country slid last quarter by almost 4% from a year ago, while the rest of the EV market recorded 15% growth over the same period.
Workers at Tesla's Shanghai factory said Sunday that they were asked to work on the weekend in anticipation of Musk's visit to the country. The plant is usually shut on weekends after the company dialed back work shifts in March amid weakening demand.
Last week, Musk postponed a trip to India, where he was expected to meet Prime Minister Narendra Modi and unveil plans for Tesla's entry into the country.
Tesla's development in China is a successful example of economic and trade cooperation between China and the U.S., the Chinese premier told Musk during their meeting Sunday, according to state broadcaster China Central Television.
Tesla is willing to further deepen the cooperation with China, Musk told Li, according to CCTV. Reuters earlier reported the visit.
Tom Zhu, a senior executive considered key to Tesla's growth in China, and Grace Tao, who oversees Tesla's external relations in the country, joined Musk's meeting with officials, who included China's top economic planner and commerce minister.
Tesla's lofty market valuation rests in part on the promise of its driving technology. The FSD system is an advanced version of the company's autopilot technology and is designed to help with driving tasks such as steering and lane changes.
"We plan on, with the approval of the regulators, releasing it as a supervised autonomy system in any market that -- where we can get regulatory approval for that, which we think includes China," Musk said during Tesla's earnings call last week.
The latest version of Tesla's self-driving capability is based only on artificial intelligence, and the company is working on expanding its core AI infrastructure and training capacity, Musk said during the call. Chief Financial Officer Vaibhav Taneja urged investors to regard Tesla as more than a car company.
Tesla has emphasized in users' manuals that the software doesn't allow for fully autonomous driving and requires active driver supervision.
Tesla mainly relies on real-time visual data its car cameras collect to power its driving-assistance features, instead of using optical-radar signals to identify traffic, a technology route that most Chinese carmakers have applied. Earlier this month, Huawei Technologies launched its camera-based autopilot technology, which the Chinese company said was more powerful than Tesla's most advanced autopilot feature currently available in China.
China has banned Tesla's cars from entering military sites and venues of government agencies and state-owned companies over concerns that data collected by the vehicles could pose national-security risks. The ban has been enforced more strictly in some cases, covering places including airports, train stations and public parking lots at police stations.
In recent years, concern over cybersecurity risks posed by data amassed by vehicles has prompted Beijing to require such data to be stored in China. Tesla has said that all data generated by its cars sold in China would be stored locally in a data center it built in 2021.
To improve its FSD capability and have the technology better work in Chinese traffic, Tesla will need data collected from China to help train the technology.
Tesla's Tao said autonomous-driving technology is a key growth engine of the EV industry, according to a commentary published by People's Daily, the Communist Party's flagship newspaper, on Friday.
Tesla has led the industry in autopilot technology from computing power, fleet size and data to models, she wrote in the article. She also highlighted that Musk has said he was willing to license Tesla's driving-assistance capabilities to other car companies." [1]
Government permits are very important at this stage of autonomous driving development when the risks are still high. Since top government officials in China are engineers, as opposed to lawyers and bankers in the West, Elon Musk might get more trust in China first. Smart move.
1. Musk Seeks Key Approval For Tesla In China --- CEO's visit to Beijing comes amid effort to expand tech feature and revive demand. Huang, Raffaele; Cheng, Selina. Wall Street Journal, Eastern edition; New York, N.Y.. 29 Apr 2024: A.1.
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