Musk’s data security win: Tesla now on Chinese govt shopping list
In April of this year, Elon Musk visited China in what was hailed as a massive victory for its Full Self Driving (FSD) technology.
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He met the top Chinese officials and received some key assurances regarding Tesla’s ability to operate in China.
China’s fear has always been that Tesla’s vehicles can be used to spy on the country. Whether the fear is genuine, or just a pressure building tactic from the communist nation, can be debated.
What is not up for debate, however, is the fact that Tesla needs China. China is its second biggest market. Even though the monthly sales figures coming out of China are on a decline, the long term interests in the country are still a major variable that will determine the success of Tesla’s FSD.
Currently, Tesla has to store its data within China. But things look to be easing up for the EV maker as Musk’s April visit has finally stated to show positive result. Chinese government has finally approved Tesla’s Model Y to be used as a government vehicle. We’ll have to wait for Friday to see how big an impact this has on the stock price, as the July 4th holiday means the markets are closed today. As far as the business is concerned, this is a big victory.
Good news from China has helped Tesla before as well. When Tesla had production capacity issues in 2019, the Shanghai factory came to the company’s rescue and the stock has gained manifolds since. Musk’s April visit itself caused the stock to soar over 12% in a day.
At a time when Tesla is struggling to impress many Wall Street analysts with its delivery figures, good news from China will help the stock fight he negativity.
Next target for Tesla
The government clearance in China means Tesla is now one step closed to its ultimate aim: Obtain permission to transfer its data abroad.
This is vital for the company’s FSD technology. And China knows it.
You see, FSD needs more and more data to improve. Tesla already has the most EVs out on the roads by a long margin. It also accounted for 55% of the total EV sales in the US in Q1 2024. When these EVs send the data back to Tesla, it helps improve the FSD technology.
No other EV maker can come close to having this many vehicles on the road, which means if FSD is ever going to become a reality, it will come from Tesla. With that sorted out, the question now becomes, how fast can Tesla perfect the tech?
That’s where China comes in. If China allows Tesla to take its data out of the country, Tesla can use the data for its tech. This will increase the pace of FSD’s improvement manifolds, as any data coming from other markets will take longer to have the same effect.
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