Tesla shares surge after Elon Musk secures deal with China’s Baidu


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Tesla is partnering with Chinese search giant Baidu to deploy mapping and navigation technology in China, as Elon Musk moves closer to rolling out more advanced driver assistance features in the world’s biggest auto market.

Tesla’s tie-up with Baidu came as Musk made a surprise visit to Beijing on Sunday. The billionaire met China’s number two leader, Premier Li Qiang, as the US carmaker contends with declining sales and data security concerns.

In striking the deal with Baidu, Tesla has cleared an important regulatory hurdle. Foreign companies selling smart vehicles in China are required to use one of about 20 approved local suppliers of mapping and navigation systems, according to a person familiar with the matter.

Tesla had about 7.5 per cent of the EV market in China in the first quarter, and the country is the carmaker’s second-biggest market.

But Musk is pushing to roll out and monetise Tesla’s “full self-driving” system — which can accelerate, steer and brake but is not strictly a fully autonomous technology — in the country as the carmaker wrestles with falling sales amid rising competition.

Tesla’s share price has fallen about 30 per cent in 2024, as it has lost ground to local rivals in China. The company has also been hit by a global slowdown in EV sales growth that has forced it to cut thousands of jobs. Tesla did not respond to a request for comment.

Earlier this year, Tesla cut the monthly subscription price for its full self-driving system in the US. Musk has also talked about licensing its systems to other carmakers.

“Going balls to the wall on autonomy is a blindingly obvious move,” Musk wrote on X, his social media platform, earlier this month.

Rolling out the technology in China would dramatically increase its subscription revenues, as well as helping it differentiate its cars against an increasing number of competitive electric vehicles from local manufacturers.

Access to high-definition mapping is crucial for even a partially self-driving technology system to work. Autonomous systems rely on a combination of sensors, such as cameras or radar, that can see obstacles, as well as maps of the existing road network, to navigate.

To steer safely, vehicles need to know exactly where they are, often within millimetres, as well as the contours of the terrain around them. 

On Sunday, Tesla’s electric vehicles were included on a list of more than 70 car models that have been tested for data security compliance by a Chinese industry group.

But Tom Nunlist, an expert in Chinese technology regulation with Beijing-based consultancy Trivium, said that the industry group’s compliance testing did not amount to approval for Tesla.

“It’s not a certification. It’s not an approval. It’s just an assessment. This industry body is examining adherence by these companies to an emerging set of requirements on a voluntary basis,” he said.

Beijing also requires sellers of vehicles with self-driving technology to store the user data needed to improve their systems, which are largely developed in the US, in China.

Musk in 2021 said Tesla had set up a data centre in China to localise “all data generated from our business here, including production, sales, service, and charging”.

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