Tesla Halts FSD Trial in China for Regulatory Compliance
Tesla, Inc. has paused its FSD trial in China to comply with new regulations requiring regulatory approval for software updates. The company is finalizing approval for its intelligent assisted driving software as it seeks to roll out FSD this year in partnership with Baidu, while facing challenges due to stringent data laws. Tesla currently holds a Zacks Rank #3 (Hold), with other companies in the auto sector receiving higher ratings.
Tesla, Inc. has postponed its Full Self-Driving (FSD) trial in China, seeking necessary regulatory approval before proceeding. This decision follows concerns about compliance with China’s new regulations requiring such approvals for over-the-air updates related to autonomous driving.
Grace Tao, Tesla China’s Vice President of External Affairs, announced the pause via Weibo. The company is currently in the process of obtaining approval for its intelligent assisted driving software, which is compatible with its hardware versions 3.0 and 4.0.
Initially, Tesla had planned for a limited-time free FSD trial in China from March 17 to April 16. The FSD technology, driven by generative AI, is designed to manage more complex traffic scenarios than prior versions.
Reportedly, Tesla aims for a full FSD rollout in China this year with assistance from Chinese tech giant Baidu to improve system functionality. However, unlike in the United States, Tesla is facing challenges in China due to stringent data laws. Consequently, the company has been unable to train its AI with real-world data from its 2 million electric vehicles registered in the country, constraining technology advancement.
Elon Musk highlighted significant challenges faced in China, particularly regarding data transfer restrictions. The Chinese government does not permit the exportation of training video footage, while U.S. regulations prevent training within China, complicating operations in this vast market.
Currently, Tesla holds a Zacks Rank of 3 (Hold). Other automotive stocks with stronger Zacks ratings include China Yuchai International Limited (CYD), Dana Incorporated (DAN), and Strattec Security Corporation (STRT), each holding a Zacks Rank of 1 (Strong Buy).
The Zacks Consensus Estimate for CYD shows expected year-over-year sales and earnings growth of 9.17% and 36.84%, respectively, in 2025. Similarly, DAN’s earnings estimates predict a year-over-year growth of 70.21% for 2025, while STRT’s sales estimates indicate a 2.61% growth.
In conclusion, Tesla’s decision to pause its FSD trial in China reflects a commitment to comply with newly imposed regulations. The pursuit of regulatory approval is critical as the company navigates data transfer difficulties and aims for future advancements in autonomous technology within a highly regulated environment like China.
In summary, Tesla’s suspension of its FSD trial in China is a direct response to new regulatory requirements. The company is actively seeking the necessary approvals while contending with challenges pertaining to data transfer and compliance. This decision may impact the rollout timeline for its autonomous driving features in a market that presents both significant opportunities and complex regulatory hurdles. Satisfactory resolution of these issues will be vital for Tesla’s success in this critical region.
Original Source: www.tradingview.com
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