Tesla’s efforts to launch its Full Self-Driving (FSD) software in China are encountering fresh obstacles, as regulatory approval is reportedly becoming entangled in broader U.S.-China trade negotiations.
Chinese authorities are considering leveraging Tesla’s FSD license as a bargaining tool in discussions with the U.S. administration, following recent tariff increases on Chinese imports, according to a report from The Financial Times.
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Tesla had originally planned to introduce FSD in China and Europe by early 2025, but the timeline now appears uncertain. Beijing has not provided a clear schedule for approving the technology, as it assesses potential countermeasures to Washington’s latest trade policies, which include a 10% tariff hike on Chinese goods. Industry analysts suggest that Tesla’s ability to deploy FSD in China could hinge on the outcome of broader trade negotiations between the two countries.
Beyond geopolitical concerns, Tesla faces additional regulatory and technical challenges in China. The company must navigate strict data security laws that prevent the transfer of training video data outside the country, limiting its ability to refine its autonomous driving algorithms.
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At the same time, U.S. regulations restrict Tesla from conducting AI training within China, creating a deadlock that complicates the software’s rollout. Tesla CEO Elon Musk has acknowledged the dilemma, stating that regulatory constraints in both countries present a significant hurdle for the company’s autonomous driving ambitions in China.
Since establishing its Shanghai Gigafactory in 2018, Tesla has expanded its presence in China, viewing the country as a key market for its long-term growth. However, escalating geopolitical tensions have made regulatory approvals more complex, particularly as Tesla’s ties with both Chinese officials and the U.S. administration come under scrutiny.
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While Tesla continues its pursuit of FSD approval in China and Europe, the company recently took an unexpected step by rolling out the technology in Mexico, despite no prior indications that it was preparing to launch the software there. The move highlights Tesla’s flexibility in deploying FSD where regulatory barriers are lower, even as it faces significant roadblocks in major international markets.