Tesla clears key regulatory hurdles for self-driving in China during Musk visit

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 favorable result from Elon Musk's surprise visit to the US automaker's second-largest market.

Tesla CEO Musk arrived in the Chinese capital on Sunday 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.

The billionaire's 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 Monday, two separate sources told Reuters Tesla had reached an agreement with Baidu to use the Chinese tech giant's mapping license for data collection on China's public roads, which they described as a key step for FSD to be introduced in the country.

And a top Chinese auto association said on Sunday Tesla's Model 3 and Y cars were among models that it had 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, its second-largest market globally, 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.

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

Rival Chinese automakers 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 was the only foreign-funded automaker to meet China's data compliance requirements and said that this would 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.

Premier Li on Sunday praised Tesla's development in China as a successful example of US-China economic and trade cooperation.

He Xiaopeng, the CEO of XPeng whose XNGP Advanced Driver Assistance System is similar to FSD, said on his Weibo account he welcomed 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.