As part of that effort, Tesla has developed plans for a data center in China to train the algorithm needed for more fully autonomous vehicles, according to two people, who asked not to be named because the work remains private .
Until recently, Tesla focused on efforts to gain approval from Chinese regulators to transfer data generated by its electric vehicles to China for its “Full Self Driving” (FSD) system out of the country, according to the two people and another person with knowledge. of the question.
It was unclear whether Tesla would pursue both options for processing autonomous driving data from China — data transfer and a local data center — or whether it was developing parallel plans as a hedge.
Tesla’s efforts underscore how quickly the electric vehicle maker is moving toward a breakthrough in AI at a time when demand for electric vehicles has slowed and competition has intensified.
Its push to use more vehicle data in China to develop the automaker’s artificial intelligence for driving comes as the U.S. government tries to crack down on the transfer of AI technology from U.S. companies to China.
Tesla has been unable to offer the full version of FSD, which costs the equivalent of nearly $9,000, in China.
A wider market for FSD in China would provide a boost to the automaker’s revenue and profits at a time when both are being squeezed by pressure from Chinese rivals such as BYD.
Tesla did not respond to a request for comment.
Creating a data center in China for FSD development would require Tesla to work with a Chinese partner, two of the sources said. There is also a potential hardware supply challenge.
It has held discussions with Nvidia about acquiring graphics processing units for a Chinese data center, according to one of the people briefed on the discussions. US sanctions prohibit Nvidia and its partners from selling its most advanced chips in China.
Nvidia declined to say whether it had held discussions with Tesla.
Tesla’s campaign to make greater use of data from China was kicked into high gear during Musk’s whirlwind trip to Beijing last month, when he met with officials including Premier Li Qiang.
In his meeting with Li, Musk sought to facilitate permissions for Tesla’s data transfer, two of the sources said. The possibility of Tesla investing in a data center in China was also raised, they said.
Musk also discussed the possibility of Tesla licensing its FSD systems to Chinese electric vehicle makers, one person said. Musk said in April that Tesla was talking to another “major” automaker about granting an FSD license, without naming it.
The Information Office of China’s State Council did not respond to a request for comment.
THE CHINA EFFECT
China, the world’s largest auto market, has the largest fleet of cars equipped with sensors capable of collecting data from congested cities with complex traffic patterns, making data generated there valuable to automakers automotive and AI providers.
Musk had previously expressed opposition to a China-based data center, arguing that moving data to the United States was the most efficient option, two people said.
Since 2021, Tesla has stored data collected by its Chinese electric vehicles in Shanghai. During that period, Tesla’s Chinese team sought approval from Chinese regulators to transfer data out of the country, two people said.
Under a one-year pilot project, companies in Shanghai’s Lingang area, where the Tesla factory is located, will be allowed to transfer certain data without the need for additional security assessments, it was reported Friday Reuters.
Some analysts see Musk as trying to make China a launchpad for autonomous driving, in the same way that Tesla’s 2019 bet on its Shanghai Gigafactory allowed it to break through as a maker of consumer electric vehicles .
“It would definitely be a big step for Tesla if it deploys FSD in China and leverages Chinese data for training the algorithms,” said Yale Zhang, managing director of Shanghai-based consultancy Automotive Foresight.
“China played a key role in increasing electric vehicle production for Tesla with the Shanghai factory. It will again play an important role in the mass adoption of autonomous driving technologies,” he said. he declares.
Many industry experts expect it will be years before fully autonomous cars become commonplace, but predictions vary widely.
The driver assistance features now offered in China are “level two” systems, meaning they require a driver willing to take over. Tesla’s FSD and its less advanced Autopilot options are also level two systems requiring attentive drivers.
More fully automated vehicle fleets operated by Baidu, China’s largest search engine operator, and Pony.ai, a self-driving startup, are operating in limited test areas.
But Chinese electric vehicle makers, including BYD, have made autonomous driving and advanced driver assistance systems a priority. Mercedes and BMW have obtained licenses to test level three systems that allow drivers to take their hands off the wheel and look elsewhere on a wider range of roads in China.
At least five automakers – Hyundai, Mazda, Toyota, Volkswagen and Nissan – have permission to transfer some of their data out of China, but none of those permissions relate to using data to train AI systems, according to lawyers, state media report. and analysts.
Penalties for violating data privacy laws that took effect in China in 2021 pose a major risk factor for data operations, say groups representing foreign companies in China.
Asked about competition from Chinese electric vehicle makers during a call with investors after Tesla’s quarterly results last month, Musk said Tesla should be seen more as an AI company.
He said he was confident that Tesla’s FSD system would work “pretty well without modification in almost all markets.” This would work best with “country-specific” training, Musk said.
Also read: Tesla’s autonomous robotaxis will be tested in China, reveals CEO Elon Musk
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