Tesla’s Full Self-Driving Tech Poised to Accelerate in China Amid Sales Slump

On the back of a quick trip to China, Tesla CEO Elon Musk announced the company had inked deals with Chinese tech giant Baidu and secured tentative approval from regulators for broader rollout of its Full Self Driving feature, a controversial technology under scrutiny from U.S. regulators. The ramp up could be crucial for generating demand in Tesla’s second largest market as the EV company battles slowing sales, according to The Wall Street Journal, which was first to publish the news.

“This is a key moment for Musk as well as Beijing at a time that Tesla has faced massive domestic EV competition in China along with softer demand,” Wedbush Securities analysts wrote in a note on Monday.

Tesla’s deal with Baidu grants the automaker access to Baidu’s navigation and mapping resources, a crucial part of how autonomous vehicles operate. Baidu is one of about a dozen companies in China that has a mapping license, according to Reuters. Tesla also passed tests related to data security compliance. Rolling out the driver assistance technology, which is officially known as Full Self Driving, would allow Tesla to charge extra for the service and could generate demand in a market where competitors like Xpeng and Xiaomi already offer similar services, Bloomberg reported.

In the U.S, however, Tesla’s suite of driver assistance technologies have come under close scrutiny. Tesla recalled 2 million vehicles at the close of 2023 amid an investigation by regulators into its Autopilot feature. Regulators found that Tesla’s Autopilot feature was involved in 450 accidents and 13 deaths, and cited problematic discrepancies between driver expectation and the actual capabilities of the technology. The California Department of Motor Vehicles in 2022 accused Tesla of false advertising when it came to the names of the carmaker’s assistance programs, Autopilot and Full Self Driving, CNBC reported. And on April 25, the National Highway Transportation Safety Administration, or NHTSA, opened another Autopilot-related query into Tesla.  

Tesla is battling slipping market share in an increasingly crowded EV market as the likes of Rivian, Hyundai, Kia, and GM offer their own battery-electric vehicles. It even briefly lost the title of the world’s top EV seller to China’s largest EV-maker BYD in the fourth quarter of 2023 before recovering it at the start of 2024. Furthermore, the EV industry more broadly is not immune from market challenges, and explosive growth of EV sales in the U.S. has finally slowed. Tesla noted an 8.5 percent year-over-year drop in EV sales in the first quarter of 2024.