"Bloodied version" FSD enters China, is Musk really anxious?

Author | Chai Xuchen

Editor | Wang Xiaojun

The story of Tesla's "wolf is coming" has finally made substantial progress.

On February 24, news indicated that Tesla is about to officially launch the FSD "Full Self-Driving" feature in China, and vehicles that have purchased this feature will gradually receive software updates. A day later, Tesla owners in China began receiving version software updates, with the main upgrades including: Autopilot assistance for urban roads, cabin camera, and map package version updates.

The "entry" of FSD into China seems to be taking shape. However, from the description of the updated features, the Autopilot assistance function supports actions such as going straight, turning left and right, making U-turns, and automatic lane changes on urban roads. Tesla's customer service responded that this function is only L2 level assistance driving and cannot achieve the fully autonomous driving capability of the US FSD.

It is worth mentioning that the threshold to experience the current intelligent driving system is not low, requiring two conditions: vehicles equipped with Tesla's 4.0 chip hardware after October 2023; and secondly, spending 64,000 yuan to purchase the FSD software package outright.

After years of delays, Tesla owners have received a "crippled version" of FSD, and older Tesla models still cannot see this "futures" fulfilled. Before this OTA, Tesla owners could only use the NOA navigation-assisted driving function on national highways, and the experience of the purely visual + no map NOA function was also not perfect.

As a pioneer player in the global intelligent driving track, Tesla has become the "least intelligent" brand in China. This also reflects Musk's difficulties.

In fact, as early as 2019, Tesla wanted to promote intelligent driving software products to domestic users, thus launching models equipped with HW3.0, allowing owners to pay for the FSD feature, but at that time could only provide basic assistance functions such as automatic parking and lane keeping.

In October 2021, Tesla announced the establishment of a data center in Shanghai to comply with China's data security regulations, achieving localization of Chinese user data storage. In April last year, Tesla also continued to deepen cooperation with Baidu, with both parties further collaborating in the fields of maps and navigation. Industry insiders believe this cleared obstacles for the entry of FSD into China.

Subsequent news of Tesla's entry into China continued to emerge, but with the continuous improvement of policies and the emphasis on data security, the process of FSD entering China slowed down again. Industry insiders pointed out that intelligent driving requires infrastructure for data centers and a large amount of video clips and simulation data for training. The biggest challenge for the "fully functional" FSD to land in China lies in the inability to collect road data for training on-site.

Musk stated at the January earnings call that Tesla's entry of FSD into China indeed encountered some challenges, "China does not allow us to upload training videos overseas, while the US does not allow us to train models in China." "So we are a bit troubled now, we can say we are in a dilemma."

Musk stated that at this stage, the only option is to find some videos of Chinese roads on the internet for FSD pre-training, but the quality of this data is always difficult to compare with data collected on-site.

Moreover, China's traffic regulations and road environments differ significantly from those in the United States, with special areas such as bus lanes, traffic islands, and waiting areas being unique scenarios on Chinese roads; and the complexity of traffic participants is high, for example, China has over 300 million electric bicycles, mixed with motor vehicles and pedestrians, which requires a very high real-time game-theoretic capability from the autonomous driving system.

However, there are reports indicating that the true "full version" of FSD is still undergoing testing and optimization. According to Musk's statement last September, if regulatory approval is obtained smoothly, it could be deployed in China as early as the first quarter of this year.

The eagerness to push the "crippled version" of FSD into the Chinese market reflects Musk's anxiety.

Last year, Tesla's global sales experienced a rare decline. The annual sales figure of 1.789 million was a year-on-year decrease of 1.1%, marking the first drop in Tesla's new car sales in ten years, with the two main models, Model 3/Y, already showing signs of sales fatigue. Among them, the Chinese market is Tesla's "iron ticket warehouse," with a year-on-year growth of 8.8%, and its share in the global market has surpassed that of the U.S., reaching as high as 37%.

However, now in the Chinese automotive market, there are countless challengers to the Model 3/Y. Last year's popular model, Xiaomi SU7, has invaded the territory of Tesla Model 3, and Model Y has been under siege since the second half of last year, with numerous models such as LeDao L60, IM Motors LS6, Avita 07, ZEEKR 7X, and IM Motors R7 directly targeting the price range of Model Y.

Originally, FSD was the foundation of Musk's Robotaxi grand vision, a "trillion-dollar opportunity" he presented to the capital market. But in the current domestic market, intelligent driving is no longer a scarce commodity.

As domestic brands continue to make breakthroughs in intelligent driving, companies like BYD, Changan, and Geely have sounded the charge for equal rights in intelligent driving, with intelligent driving packages available for 70,000 yuan and laser radars for 100,000 yuan... Even though consumer enthusiasm for purchasing new Tesla cars remains high, fewer and fewer consumers are willing to spend nearly a quarter of the car price to opt for FSD.

This means that Tesla's uniqueness built on AI and intelligence is being rapidly diluted, and the trillion-dollar market value story may become a castle in the air. However, Musk has no more choices at this point; launching a still immature version of FSD in the Chinese market is a gamble for Tesla.

Industry insiders have stated that Tesla is bringing some exclusive "NOA" capabilities for the Chinese market, and the rollout of the "full version" of FSD will take a gradual approach. However, right after Tesla's update, Xiaomi quickly pushed out an end-to-end intelligent driving system, and leaders from XPeng, Avita, Li Auto, and other car companies have also "humbly" expressed their willingness to engage in mutual learning with FSD Perhaps, the second half of this intelligence-driven competition has just reached its climax. The situation is still uncertain, and each player with unique skills harbors ambitions to become the ultimate giant, while Musk can only secure a greater winning edge by implementing the grand plan from years ago.

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