(Bloomberg) – Elon Musk’s quick trip to China has yielded immediate results, helping Tesla Inc. clear two key hurdles to bring driver-assistance systems to the world’s largest car market.
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The U.S. automaker plans to partner with Chinese tech giant Baidu to provide mapping and navigation capabilities to support what the company calls “fully autonomous driving,” or FSD, according to people familiar with the matter. That’s what it means. Tesla has also passed important data security and privacy requirements, which should help ease some of the concerns about bringing FSD to market in China.
Tesla shares rose as much as 6.6% in pre-market U.S. trading, while Baidu rose 2.4% in Hong Kong.
The development comes after Tesla CEO Elon Musk made an unannounced visit to China on Sunday seeking approval for driver-assistance software that could help stem the automaker’s decline in revenue. Although the company’s suite of features requires continuous monitoring and does not make Tesla autonomous, the company charges his $8,000 for these features in the US, or $99 per month for a subscription. ing.
The Wall Street Journal reported on Monday that Chinese authorities have told Tesla that the Chinese government has given preliminary approval to the company’s plans to launch FSD in the country, citing people familiar with the matter.
Read more: Musk makes surprise visit to China to boost Tesla’s revenue
Musk met with Prime Minister Li Qiang on Sunday. As Secretary of the Communist Party of China in Shanghai, Premier Li Qiang helped the company establish what is now a world-class factory. His private jet departed from Beijing on Monday, according to Flight Radar 24.
Tesla initially received a red carpet welcome in China, but its fortunes have dimmed in recent days as it faces tougher competition from domestic EV makers led by BYD. Tesla’s share of China’s car market shrank to about 6.7% in the fourth quarter of 2023. It was 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, with many local companies including Xpeng Inc. and Xiaomi Corp. using them as selling points for their vehicles. Automakers have also been successful in charging extra for driver-assistance features, which Tesla has made available after lowering prices to levels that could wipe out the operating profits it receives from the market. become.
Approval of FSD in China would be a major boost for Tesla, which has seen its quarterly sales decline year over year for the first time since 2020. Despite lowering prices, the company’s car sales declined in the first quarter. Musk aims to cut headcount by at least 10% and accelerate development of new models, including cheaper vehicles, that could be completed by early 2025, if not by the end of the year.
Dan Ives, a senior analyst at Wedbush Securities, said in an interview with Bloomberg Television that Musk’s surprise visit to China is a “turning point.” “I see this as potentially opening the door for FSD in China, and it unlocks what could just be a great opportunity for them.”
By partnering with Baidu, one of approximately 20 certified suppliers with top domestic map certification qualifications applicable to driver assistance features, Tesla will provide the Chinese company’s lane-level navigation and mapping services. becomes available. Tesla has been using his Baidu for in-car mapping and navigation since 2020.
Getting the green light for FSD in China could help Tesla regain some lost ground, but the company’s driver-assistance systems have proven problematic in the United States. The nation’s top auto safety regulator blamed 20 crashes since December involving vehicles that had received over-the-air software updates meant to prevent abuse of the company’s less capable Autopilot system. We have just begun our investigation.
At last week’s earnings conference, Musk emphasized the importance of self-driving development and said anyone who doubts Tesla’s ability to “solve” self-driving should not invest in the company.
(Updates Tesla stock movement in third paragraph.)
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