BEIJING – Tesla has cleared some key regulatory hurdles that have long hindered it from rolling out its self-driving software in China, paving the way for a favourable result from billionaire owner Elon Musk’s surprise visit to Tesla’s second-largest market.

Mr Musk, Tesla’s CEO, arrived in Beijing on April 28, where he was expected to discuss the rollout of “full self-driving” (FSD) software and permission to transfer driving data overseas, according to a person with knowledge of the matter.

His whirlwind visit, during which he met with Chinese Premier Li Qiang, came just over a week after he scrapped a planned trip to India to meet with Prime Minister Narendra Modi, citing “very heavy Tesla obligations”.

On April 29, two separate sources told Reuters that Tesla has reached an agreement with Baidu to use the Chinese tech giant’s mapping licence for data collection on China’s public roads, which they described as a key step for FSD to be introduced in China.

Also, a top Chinese car association said on April 28 that Tesla’s Model 3 and Y cars were among models that it has tested and found to be compliant with China’s data security requirements.

Data security and compliance have been key reasons why the US electric vehicle maker, which rolled out the most autonomous version of its Autopilot software four years ago, has yet to make FSD available in China despite customer demand.

Chinese regulators had since 2021 required Tesla to store all data collected by its Chinese fleet in Shanghai, leaving the company unable to transfer any back to the United States.

Mr Musk is looking to obtain approval to transfer data collected in China abroad to train algorithms for its autonomous driving technologies, the person said.

Equity analysts at Wedbush called Mr Musk’s surprise visit “a major moment for Tesla”.

Rival Chinese carmakers and suppliers such as XPeng and Huawei Technologies have been seeking to gain an advantage over Tesla by rolling out similar software.

Retired newspaper commentator Hu Xijin said on his Weibo account that Tesla is the only foreign-funded carmaker to meet China’s data compliance requirements, and that this will pave the way for Tesla cars to enter premises owned by government agencies and state-owned firms across China.

“This is not only a breakthrough in China, but also a significant demonstration for the entire world in solving data security issues,” he said.

Prime Minister Li on April 28 praised Tesla’s development in China as a successful example of US-China economic and trade cooperation.

China data

Tesla cars have, for years, been banned from entering Chinese military complexes over security concerns relating to cameras installed on its vehicles. Its cars have also been turned away from sites holding important political events, such as an annual summer leadership conclave the ruling Communist Party held in 2022.

Mr He Xiaopeng, CEO of XPeng, whose XNGP Advanced Driver Assistance System is similar to FSD, said on his Weibo account he welcomes the entry of the Tesla technology into China.

“Only with the entry of more good products and technologies can the experience of the entire market and customers be improved, and it will allow the market’s development to accelerate in a healthy manner,” he said.

“Let a hundred flowers bloom,” he said, echoing a famous line from Mao Zedong, the founder of modern China.

The improved prospect of FSD entering China comes as Tesla shares have lost almost a third of their value since the start of 2024, as concerns have grown about the EV maker’s growth trajectory. Last week, Tesla reported its first decline in quarterly revenue since 2020, when the Covid-19 pandemic slowed production and deliveries.

Mr Musk said last week that Tesla will introduce new, cheaper models using its current EV platforms and production lines and will offer a new “robotaxi” with self-driving technology. He said on X in April that he would unveil the robotaxi on Aug 8.

China’s complicated traffic conditions, with more pedestrians and cyclists than in many other markets, provide more scenarios that are key for training autonomous driving algorithms at a faster pace, according to industry experts.

“If Musk is able to obtain approval from Beijing to transfer data collected in China abroad this would be a game changer around the acceleration of training its algorithms for its autonomous technology globally,” Wedbush analyst Dan Ives said in a note.

Mr Musk said Tesla may make FSD available to customers in China “very soon”, in response to a query on X.

Besides meeting Mr Li on the short trip to Beijing, Mr Musk met the organiser of the ongoing Beijing car show.

The chairman of Chinese battery giant CATL, Mr Robin Zeng, a key Tesla battery supplier, also visited Mr Musk’s hotel on April 29, according to a Reuters witness.

Mr Musk had been set on his cancelled India trip to announce US$2 billion (S$2.7 billion) to US$3 billion in new investments, including in a car plant, after India offered lower import taxes on EVs in return under a new policy. REUTERS