Musk's 23-hour "lightning" trip to China, Tesla's FSD entry into China is one step further

High beams

2024-04-30 10:06Published on the official account of Beijing Tencent Automobile's "High Beam" column

Tencent Auto "High Beam" Author Lin Keying

At 1:17 p.m. on April 29, Tesla CEO Elon Musk returned to leave Beijing, ending his trip to China in less than 24 hours.

In this short day, Musk has been walking non-stop, and Tesla has been positive: Ren Hongbin, President of the Council for the Promotion of International Trade, and Premier Li Qiang have met with Musk, and the Model 3 and Model Y series models produced in China have passed China's data security compliance testing, and it is also reported that Tesla is suspected to have reached a cooperation agreement with Baidu to obtain the surveying and mapping qualification to collect China's public road data.

Against this backdrop, Musk's statement on social platforms on April 20 that "FSD may soon enter China" seems to be a step forward. There is even news that Tesla has received "tentative approval" to launch the FSD function in Chinese mainland.

Musk's Beijing 23 hours

At around two o'clock in the afternoon on April 28, Musk arrived at Beijing Capital International Airport by private jet.

It was a surprise visit. Just about a week ago, Musk announced the postponement of his planned visit to India, citing "Tesla's side is very busy".

According to CCTV News, Musk's trip was at the invitation of the China Council for the Promotion of International Trade. After arriving in Beijing, Ren Hongbin, president of the CCPIT, will meet with Musk to exchange topics such as the next step of cooperation.

Reuters reported that Musk intends to seek to meet with senior Chinese officials to discuss the launch of Full Self-Driving software (FSD) in China, and hopes to obtain permission to transfer car data collected in China abroad for self-driving algorithm training.

In the afternoon of the same day, Premier Li Qiang met with Musk at the Diaoyutai State Guesthouse. According to CCTV news broadcast, Li Qiang called Tesla's development in China "a successful example of Sino-US economic and trade cooperation", saying that China's super-large-scale market will always be open to foreign-funded enterprises, and China will continue to work hard to expand market access and strengthen service guarantees, so as to provide a better business environment and more powerful comprehensive support for foreign-funded enterprises, so that enterprises from all over the world can invest in China with peace of mind and confidence.

Musk said that Tesla's Shanghai Gigafactory is Tesla's best-performing factory, thanks to the hard work and wisdom of the Chinese team. Tesla is willing to further deepen cooperation with China and achieve more win-win results. Musk posted that night, "It's an honor to meet with Premier Li Qiang. We have known each other for many years since we first met in Shanghai. ”

The "first sight" Musk refers to dates back to 2018. At that time, Tesla's first overseas gigafactory was located in Shanghai, which was the largest foreign-funded manufacturing project in Shanghai at that time. On the day of the signing, Li Qiang, then secretary of the Shanghai Municipal Party Committee, met with Musk to congratulate the official signing of Tesla's pure electric vehicle project, and expressed the hope that the two sides would take this opportunity to establish closer ties, further expand all-round cooperation, and promote mutual benefit and win-win results.

The investment and construction of the Shanghai Gigafactory brought a turnaround for Tesla, which was at a low production capacity, and its market value soared to $1.3 trillion in November 2021, which also allowed Chinese car companies to achieve rapid development under the catfish effect - the rapid rise of new car-making forces such as "Wei Xiaoli", the continuous emergence of domestic new energy brands, and China's becoming the world's largest car exporter.

FSD became a trump card for Tesla to get out of the predicament

Six years on, Tesla's situation with China's auto industry is very different from what it used to be. In the fourth quarter of 2023, BYD surpassed Tesla to become the world's largest pure electric vehicle manufacturer. At the same time, since the beginning of this year, Tesla has been in turmoil, with sales and revenue performance in the first quarter falling short of expectations, and the scope of layoffs and cost reductions has continued to expand. As of press time, Tesla's market capitalization has fallen to $527.332 billion.

In response to the fact that sales were exceeded, Musk previously responded that Tesla is more of an artificial intelligence and robotics company than car companies. This is also Musk's attitude all along, and FSD is an important part of his artificial intelligence business deployment. In the first quarter of this year's earnings call, he once again reiterated that the understanding of Tesla as just a car company is one-sided, "If someone doesn't believe that Tesla will solve the problem of self-driving, I don't think they should be investors in this company."

At the time of the performance setback, FSD seems to have become a trump card for Tesla to get out of the predicament.

"Tesla will invest about $10 billion this year in AI training and inference, which is mainly used in cars. On the evening of April 28, Musk, who is on his way to China, reiterated his $10 billion investment plan on social media platforms and said that any company that does not meet such a level of spending, or cannot use it efficiently, will not be able to compete.

As the transformation of the automotive industry enters the second half, intelligence is becoming a battleground, and Tesla is undoubtedly one of the earliest starters in this field. In 2020, Tesla officially released the FSD beta version, which has now been changed to V12.

Musk said at the first-quarter earnings conference that Tesla has launched FSD V12 for all vehicles equipped with cameras and inference computers in North America, and it has been pushed to about 1.8 million vehicles, about half of the people use it, and this proportion is increasing week by week.

The development and promotion of FSD is crucial to saving Tesla's performance and stock price. Tesla's fourth-quarter 2022 financial report revealed that the revenue brought by FSD in the quarter reached $324 million. Although the financial report for the first quarter of this year did not mention the specific amount, it said that the launch of its automatic parking function in North America led to a year-on-year increase in FSD revenue. In November 2023, Goldman Sachs Mark Delaney and his team wrote that as Tesla's models grow, revenue from software such as FSD could reach $10 billion to $75 billion per year by 2030, while Tesla's annual revenue in 2023 will be $96.773 billion.

In order to increase the FSD subscription rate, Tesla has taken steps to promote FSD several times this year. On March 25, Musk announced that he would offer a one-month free trial of the FSD feature to all eligible U.S. vehicles, on April 13, the price of overseas FSD monthly subscriptions dropped from $199 to $99, and on April 21, Tesla announced that it would reduce the price of the FSD package in the U.S. market from $12,000 to $8,000, and the price in the Canadian market from $16,000 to $11,000.

Trials and price cuts are all about bringing FSD to a larger market, and China is a difficult part to get around. Since 2023, the competition in China's automotive industry has become more and more fierce, and the price war has continued to increase, and many companies such as Huawei and Xpeng have also made breakthroughs in intelligent driving. For Tesla, if FSD fails to land in China, its starting advantage will be weakened or even replaced, and its sales performance may usher in greater challenges.

In fact, even Tesla's proud pure vision solution and end-to-end architecture have been tried in China. On October 17, 2023, Jiyue announced that its high-end intelligent driving solution based on pure vision has run through the urban navigation assistance function in the core urban area of Shanghai. On April 24, 2024, Huawei unveiled Qiankun, a new intelligent vehicle solution brand with intelligent driving at its core, and launched the Qiankun ADS 3.0 intelligent driving solution. Jin Yuzhi, CEO of Huawei's Intelligent Vehicle Solution BU, announced that ADS 3.0 will be upgraded to an end-to-end architecture.

At the recent press conference of the Beijing Auto Show, Xiaomi, which is in the limelight, also announced that it will open NOA in 10 cities at the end of May and NOA in all major cities in the country in August.

Under the pressure of encirclement and interception, Tesla's FSD entry into China is imminent, and the core is still how to meet regulatory requirements. Musk previously admitted in the earnings call that although Tesla is confident that FSD can perform well in almost any market, the more critical issue lies in regulation, "the release of FSD in any market needs to be approved by local regulatory authorities, and the Chinese market is no exception."

FSD's landing in China ushered in a turnaround?

The progress of FSD in China has been stagnant for a long time, but it seems to have ushered in a turnaround in recent days.

On the same day of Musk's visit to China, the China Association of Automobile Manufacturers and the National Computer Network Emergency Technology Processing and Coordination Center issued the "Notice on the Testing of Four Safety Requirements for Automotive Data Processing (First Batch)", and all models produced by Tesla Shanghai meet the compliance requirements. Six car companies that have passed the test include BYD, Ideal, Lotus, Hezhong New Energy, Tesla, and NIO, and Tesla is the only foreign-funded car company.

According to the notice, the test will be organized and launched from November 2023 in accordance with the principle of voluntary inspection by enterprises, aiming at the data security compliance of newly listed intelligent networked vehicles of automobile manufacturers from 2022 to 2023. The test is based on the relevant provisions of regulations and standards such as "Several Provisions on Automotive Data Security Management (Trial)", GB/T 41871-2022 "Information Security Technology - Security Requirements for Automotive Data Processing", and the specific testing content includes anonymization of face information outside the vehicle, non-collection of cockpit data by default, in-vehicle processing of cockpit data, and significant notification of personal information processing.

Previously, Tesla was blocked in many places such as China's highways, airport parking lots, and government office areas. After the announcement was issued, according to the first financial report, Tesla said that various places have successively lifted the ban on driving and parking restrictions on intelligent networked vehicles such as Tesla.

This means that Tesla's FSD entry into China ushered in good news. Although Tesla has previously opened its FSD subscription service in China, it is limited to lower-level assisted driving functions, and its biggest obstacle is data security.

Musk has repeatedly stated his stance on this, sparing no effort to prove the security of Tesla's data. On March 21, 2021, Musk said at the China Development Forum that Tesla would never provide the U.S. government with any vehicle and user data it collects in China or other countries, and that "if Tesla uses vehicle data to steal user privacy information, including China, we will be shut down."

The Several Provisions on the Security Management of Automotive Data (for Trial Implementation) issued in 2021 requires that important data shall be stored in China in accordance with the law, and if it is truly necessary to provide it overseas due to business needs, it shall pass a security assessment organized by the national cyberspace administration in conjunction with the relevant departments of the State Council. As one of the first pilot companies, Tesla announced in May of that year that it would establish a data center in China to localize data storage, and all data generated by vehicles sold in the Chinese mainland market would be stored in China; in October of that year, Tesla's Shanghai data center was officially completed.

Musk's visit to China has been superimposed on the test results, and the entry of FSD into China seems to have shown a harbinger. On the evening of April 28, Tesla issued a document saying that it will continue to cultivate in China, develop together with the industry in artificial intelligence, electric vehicles, energy storage and other fields, accelerate the implementation of clean energy and autonomous driving technology, and turn the beautiful vision into reality.

On April 29, according to Reuters, two people familiar with the matter revealed that on the occasion of Musk's visit to China, Tesla and Baidu reached a cooperation agreement to obtain Baidu's surveying and mapping qualifications to collect data on China's public roads. In addition, Baidu will also provide Tesla with a lane-level navigation system. The deal clears the last regulatory hurdle for Tesla's launch of FSD in China, the sources said. In the afternoon of the same day, Baidu's stock price rose more than 7%.

On the same day, He Xiaopeng, chairman of Xpeng Motors, said on social media that Tesla's FSD entry into China was particularly welcome. "Tesla has very good self-driving technology and brand. Only when more good products and technologies enter can the entire market and customers have more good experiences, so that the market can develop more benignly and accelerate. ”

The Wall Street Journal reported that after Musk's visit to Beijing, Tesla received "tentative approval" to launch FSD capabilities in Chinese mainland. As of the close of trading on April 29, Tesla's stock price rose to $194.05 per share, an increase of 15.3%, the highest one-day increase since March 2020, and the market value increased by more than $82 billion.

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