While the overall trend is for FSD to enter China, there are still two major issues before it becomes a reality -- data collection eligibility and supercomputing centers, according to CITIC Securities.
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A Chinese official's remarks a month ago sparked much anticipation for Tesla to bring FSD (Full Self-Driving) to China.
However, Tesla still has a lot of work to do if it makes this a reality. A team of local analysts shared their views in a new research note.
The trend of Tesla FSD entering China is becoming clearer, which is expected to accelerate the progress of intelligence in local electric vehicles (EVs), said a team of CITIC Securities analyst Lian Yixi in a research note today.
While the overall trend is for FSD to enter China, it is still two major issues away from becoming a reality -- data collection eligibility and supercomputing centers, according to the team.
Under China's current regulations, high-precision map mapping can only be conducted by qualified entities, and only 19 currently hold the qualification, the team noted.
Moreover, the compilation of electronic maps for navigation is currently open only to local companies, and the transmission of mapping data outside of China must also be approved in advance, the team said.
Map data is highly sensitive and related to national security, and exactly how Tesla should obtain the qualification is still unknown, the team said.
Viable options for Tesla include forming a joint venture with a Chinese company or moving the process forward in Shanghai on a pilot basis, but it would be difficult for it to roll out the effort on a large scale any time soon, according to the team.
In addition to map-related qualifications, Tesla would need to build a supercomputing center in China.
The pure vision route for autonomous driving relies more on massive data collection and model training for image processing, so Tesla built Dojo, a supercomputing center in the US, and developed its own D1 chip to improve the training efficiency of FSD, CITIC Securities noted.
And in China, even if Tesla obtains the data acquisition qualification, the probability is that it can only train the model locally in China and the data may not be allowed to be transmitted back to the US, the team said.
This means that to achieve the same training efficiency as in the US, Tesla would need to establish a supercomputing center in China similar to Dojo, which would require a certain development cycle and cost, according to the team.
Despite these two major issues, CITIC Securities believes that if Tesla succeeds in bringing FSD to China, it will benefit the overall intelligence of China's EVs, helping to strengthen consumer education, expand the market, and accelerate the process of letting the best win out.
The entry of FSD into China is likely to significantly strengthen consumers' awareness of the intelligence of cars and develop their daily needs and habits for smart driving, which is expected to allow the market to expand significantly in China, the team said.
It is also important to note that if Tesla introduces the highly profitable FSD to China, it has the potential to further reduce the prices of its vehicles and could launch a lower-priced Model 2/Q, with pricing likely in the RMB 150,000 ($21,070) to RMB 200,000 range, according to the team.
If such a scenario emerges, cost pressures on local low- and mid-range models would be further exacerbated, when obtaining a low-priced but qualified smart driving software from a third-party supplier could become a mainstream option for car companies with weaker R&D capabilities, the team said.
($1 = RMB 7.1213)
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