(Bloomberg) — Elon Musk’s whirlwind visit to China paid immediate dividends, with Tesla Inc. overcoming two major hurdles to introduce its driver assistance system to the world’s biggest auto market.
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The U.S. automaker will partner with Chinese technology giant Baidu Inc. for mapping and navigation functions to implement what it calls Full-Self Driving, or FSD, according to people familiar with the matter. Tesla has also approved a key data security and privacy requirement in China, which would help alleviate some of the concerns about introducing FSD to the market.
Baidu shares rose as much as 7% in Hong Kong trading.
The moves come after Tesla Chief Executive Elon Musk made an unannounced trip to China on Sunday seeking approval for driver assistance software that could help stem the automaker’s revenue decline. While the feature set requires constant supervision and doesn’t make Teslas autonomous, the company charges $8,000 in the U.S. to purchase FSD outright, or $99 per month for a subscription.
Read more: Musk makes surprise visit to China in search of increased Tesla revenue
The Wall Street Journal reported on Monday that Chinese officials told Tesla that Beijing has tentatively approved the company’s plan to launch its FSD feature in the country, citing people familiar with the matter.
Musk met on Sunday with Premier Li Qiang, who, as secretary of the Chinese Communist Party in Shanghai, helped the company establish what is now its main global factory. His private jet departed Beijing on Monday, according to FlightRadar24.
While Tesla was initially welcomed on the red carpet in China, its fortunes have declined more recently as it faces stiffer competition from domestic electric vehicle makers such as BYD Co. and Li Auto Inc. in the quarter of 2023, up from 10 .5% in the first quarter of last year, according to Bloomberg calculations based on data from the China Passenger Car Association.
Advanced driver assistance systems are becoming increasingly common in China, with many local players, including Xpeng Inc. and Xiaomi Corp., using such features as a selling point for vehicles.
Approval of the FSD in China would be a big boost for Tesla, which is emerging from its first annual decline in quarterly revenue since 2020. Even after cutting prices, the company sold fewer cars in the first quarter. Musk is reducing the number of employees by at least 10% and is looking to accelerate new models, including cheaper vehicles, which could be ready in early 2025, or even before the end of the year.
Musk’s surprise visit to China is “a watershed moment,” said Dan Ives, senior analyst at Wedbush Securities, in an interview with Bloomberg Television. “This could open up FSD in China, which I see as opening up what could really be a golden opportunity for them.”
The partnership with Baidu – one of about 20 qualified suppliers with high-level mapping credentials in the country that can be applied to driver assistance functions – will allow Tesla to leverage Tesla’s vehicle lane-level mapping and navigation services. Chinese company. Tesla has been using Baidu for car mapping and navigation apps since 2020.
While getting the green light for FSD in China could help Tesla make up some lost ground, the system has proven problematic in the US. The top U.S. auto safety regulator just opened an investigation into the company’s less capable Autopilot system, citing 20 crashes that have occurred since December involving vehicles that received an over-the-air software update.
During an earnings call last week, Musk emphasized the importance of developing autonomous driving, saying that people who doubt Tesla’s ability to “solve” autonomy shouldn’t invest in the company.
(Adds Baidu shares in third paragraph.)
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