Tesla Clears Key China Assisted-Driving Hurdle With Baidu Deal


(Bloomberg) — Elon Musk’s surprise visit to China appears to have paid immediate dividends, with Tesla Inc. clearing two key hurdles to introduce its driver-assistance system to the world’s biggest auto market.

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The US electric car maker will partner with Chinese tech giant Baidu Inc. for mapping and navigation functions to deploy what it calls Full-Self Driving, according to people familiar with the matter. Tesla has also cleared a key data security and privacy requirement in China, which would help ease some of the concerns over its data security issues.

The moves come after Tesla Chief Executive Office Elon Musk made an unannounced trip to China on Sunday, seeking approval for driver-assistance software that could help arrest the carmaker’s revenue decline. While the suite of features require constant supervision and don’t make Teslas autonomous, the company in the US charges $8,000 to buy FSD outright, or $99 a month for a subscription.

Read More: Musk Makes Surprise China Visit in Search of Tesla Revenue Boost

Musk met Sunday with Premier Li Qiang, who as the Chinese Communist Party secretary for Shanghai helped the company set up what is now its top plant globally.

While Tesla initially enjoyed a red-carpet welcome in China, it’s fortunes have faded more recently as it faces tougher competition from domestic EV makers like BYD Co. and Li Auto Inc. Tesla’s share of China’s auto market shrank to around 6.7% in the fourth quarter of 2023, from 10.5% in the first quarter of last year, according to Bloomberg calculations based on China’s Passenger Car Association data.

Advanced driver-assistance systems are becoming increasingly common in China, with many local players including Xpeng Inc., Xiaomi Corp. and Huawei Technologies Co., using such features as a selling point for vehicles.

It is also coming off its first year-over-year decline in quarterly revenue since 2020, having sold fewer cars even after slashing prices. The company is cutting headcount by at least 10% and looking to accelerate new models, including less-expensive vehicles, that could be ready by early 2025, if not before year-end, Musk said last week.

Musk’s surprise China visit is “a watershed moment,” Wedbush Securities senior analyst Dan Ives said 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 when it comes to FSD and autonomous in China, which has been a missing piece in the puzzle.”

While getting the green light for FSD in China might help Tesla claw back some lost ground, the system has proved problematic in the US. The top US auto-safety regulator has just opened a probe into the company’s less-capable Autopilot system, citing 20 crashes that have occurred since December involving vehicles that received an over-the-air software update.

In an earnings call last week, Musk emphasized the importance of autonomous driving to Tesla’s future, saying people who doubt the company’s ability to “solve” autonomy shouldn’t invest in it.

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