Musk "flashed" China, and Tesla's market value skyrocketed by more than one trillion

Reporter Guo Yangchen and Quartz Jing report from Shanghai

Since the beginning of this year, Tesla, which has been in turmoil, has been in the eye of the storm of public opinion.

According to the financial report data, in the first quarter of 2024, Tesla's revenue will be $21.3 billion, a year-on-year decrease of 8.69%, the largest revenue decline in 12 years; Net profit was US$1.13 billion, down 55% year-on-year. Tesla's stock price also fluctuated significantly, and the day before the release of the first quarterly report, Tesla's stock price once fell to a minimum of $138.8 per share.

Tesla CEO Elon Musk (Elon Musk) chose to visit China in a low-key manner a few days ago. The reporter of "China Business Daily" learned that on the afternoon of April 28, Musk arrived in Beijing in a low-key manner; At noon on April 29, Musk returned to the United States by private jet. In less than 24 hours in China, the most significant breakthrough is that Tesla has passed the automotive data security compliance requirements in China, becoming the first foreign-funded car company to pass the relevant national standards. In the eyes of the outside world, Tesla's Full Self-Driving software (FSD) is also expected to accelerate the implementation in China.

"We are honored to be part of the rapid development of China's new energy vehicle industry." Tesla China said 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.

It is worth mentioning that after Musk's "flash" in China, Tesla's stock price has rebounded to $184.2 per share as of the close of trading on May 6, an increase of about 32.71% from the previous low. Suddenly, Tesla's market value soared by about 145 billion US dollars (1,047.952 billion yuan), exceeding one trillion yuan.

Pass automotive data security compliance requirements

The reporter learned that Musk's unexpected visit to China this time was mainly to discuss the launch of Full Self-Driving (FSD) software in China and seek approval. At the same time, it may seek permission to transfer data collected in China abroad for the purpose of training algorithms for autonomous driving technology.

After arriving in Beijing, Musk said that he was pleased to see the progress of electric vehicles in China, and that all cars will be electric in the future. Tesla's Shanghai Gigafactory is Tesla's best-performing factory, thanks to the industrious wisdom of the Chinese team. Tesla is willing to further deepen cooperation with China and achieve more win-win results.

Regarding Musk's visit to China, on April 29, Foreign Ministry spokesman Lin Jian said that China is committed to high-quality development, firmly pursues an opening strategy of win-win cooperation, continues to build a first-class business environment that is market-oriented, law-based and internationalized, actively promotes foreign investment, attaches great importance to the relevant demands of foreign-funded enterprises, and effectively protects the legitimate rights and interests of foreign-funded enterprises. "We treat domestic and foreign-funded enterprises equally, welcome foreign-funded enterprises to continue to deepen cooperation with China and share the fruits of China's economic development, and also hope that foreign-funded enterprises will abide by China's laws and regulations and fulfill their security commitments."

It is worth mentioning that on the 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 4 Security Requirements for Automotive Data Processing (First Batch)", Tesla is the only foreign-funded enterprise that meets the compliance requirements, and Tesla's domestically produced Model 3 and Model Y also meet the automotive data security compliance requirements.

According to reports, in order to standardize automotive data processing activities, the China Association of Automobile Manufacturers and the National Computer Network Emergency Technology Processing and Coordination Center will organize the testing of the data security compliance of newly listed intelligent networked vehicles of automobile manufacturers from November 2022 to 2023 in accordance with the relevant regulations and the principle of voluntary inspection by enterprises, including anonymization represented by face information outside the vehicle, no collection of cockpit data by default, in-vehicle processing of cockpit data, and significant notification of processing personal information.

Tesla China said that various localities have successively lifted the ban on driving and parking restrictions on intelligent connected cars such as Tesla. "We believe that the inspection and testing of data and personal information protection of vehicles sold by authoritative institutions in accordance with the relevant laws and regulations of several provisions on automobile data will help enhance the public's trust in data application, promote the improvement of data security level of automobile companies and the entire industry, and help increase the attention of automobile companies to product data processing compliance, better use data resources, and promote industrial development."

It is reported that Tesla has realized localized data storage in Tesla's Shanghai data center in 2021. In addition, Tesla has introduced a third-party authority to audit the company's information security management system and passed the security management system certification (ISO27001).

"Paying attention to data security is not unique to China, and European and American countries also attach great importance to data security. In contrast, I think so far China has designed data security (norms) more systematically. Gong Min, head of automotive industry research at UBS China, said in an interview with reporters that in the field of autonomous driving, the U.S. market is dominated by Tesla, and the Chinese market is full of flowers and competition, all of which are leading the latest development direction of the global autonomous driving industry.

According to the analysis of CICC's research report, if Tesla's FSD is promoted in China, the entire set of data closed-loop needs to be in China, and it is necessary to prepare for data collection and model training, and consider whether the BEV perception scheme can be well adapted locally. In China, FSD mapping may need to cooperate with Chinese manufacturers, and Tesla needs to build a local computing center and set up a local algorithm adaptation team.

FSD's entry into China will produce a "catfish effect"

At present, Tesla FSD has entered the V12.3 stage. In March, Tesla pushed the FSDV version 12.3.1 to North American car owners, introducing "end-to-end neural network" technology. This technology uses artificial intelligence technology to influence vehicle control, such as operating steering wheel pedals, turn signals, etc., through deep learning of driving data from more than one million vehicles, rather than hard-coding every driving behavior, marking another leap forward in Tesla's autonomous driving field.

Tesla has said that it will not disclose the subscription rate of FSD for the time being, but in terms of pricing, Tesla admits that FSD is of great value to cars, and the current price offered by Tesla is actually similar to the value of "options". The implication is that the current FSD price is not too expensive.

On April 23, Tesla just released its first quarter report for 2024, with revenue of $21.3 billion, down 8.69% year-on-year, the largest revenue decline in 12 years; Net profit was US$1.13 billion, down 55% year-on-year. At the same time, during the reporting period, Tesla delivered a total of 387,000 vehicles, a year-on-year decrease of 8.3%. This is Tesla's first year-on-year decline since the second quarter of 2020.

In contrast, FSD's revenue increased year-on-year, which shows that FSD will become Tesla's "profit cow" in the future. Tesla, for its part, said that the company has been investing in the hardware and software ecosystem needed to enable autonomous driving. The company believes that a scalable and profitable autonomous business can be achieved through a vision-only architecture based on end-to-end neural networks based on billions of miles of real-world data.

In April, Musk also said on social media that Tesla could offer FSD to Chinese customers "soon." Tesla's competitors in China, such as Xpeng, are also launching similar Autopilot products to gain an advantage over Tesla.

Regarding Tesla's FSD entry into China, on April 29, He Xiaopeng, chairman of Xpeng Motors, publicly said: "Tesla has very good autonomous driving technology and brand, and Tesla FSD is especially welcome to enter China." Only when more good products and technologies enter can the entire market and customers have more good experiences, so that the market can develop benignly and accelerate. ”

The reporter noticed that Tesla's FSD cumulative mileage data can be said to be far ahead. According to the financial report, as of the first quarter of 2024, the total mileage of FSD's real road conditions has reached 1.25 billion miles (about 2 billion kilometers). Tesla expects that at the current rate, the cumulative mileage of FSD is expected to reach 2 billion miles by the end of May and 6 billion miles within a year.

Gong Min believes that in the field of autonomous driving, the U.S. market is dominated by Tesla, while the Chinese market is full of flowers and competition, and is leading the latest development direction of the world. "At present, overseas leading electric vehicle companies must have an advantage, and the huge amount of data collection and feedback is their advantage. But this is an era of competition that promotes rapid innovation and iteration, so I have greater confidence in the development of China's autonomous driving industry. ”

Zhang Xiang, a visiting professor at the Yellow River Institute of Science and Technology, told reporters that Tesla was the first company to develop autonomous driving, and the accuracy of the FSD algorithm is relatively high. However, Tesla mainly collects FSD training data in North America, but China's road conditions are more complex than those in the United States, and there are more pedestrians on the road, which increases the difficulty of using FSD, and it will take a lot of time to debug and optimize FSD after entering the Chinese market in the future.

"Autonomous driving is ultimately a software technology, which requires constant trial and error, even with real scenarios. In the actual traffic accident, if the responsibility for autonomous driving is divided, how the insurance company will guarantee it, and so on, it will take time to sort out. Zhang Xiang further said.

(Editor: Quartz Jing Review: Tong Haihua Proofreader: Zhang Guogang)