Tesla’s self-driving ambitions reached a new stage this week when CEO Elon Musk told shareholders that China could fully approve the company’s Full Self-Driving (FSD) software by early next year. At Tesla’s annual meeting in Austin he said regulators had already granted partial approval and that he was optimistic about securing full authorisation around February or March. His matter-of-fact tone belied the stakes behind the push. China is the world’s largest car market and Tesla’s biggest sales engine outside the United States. Winning Chinese regulators’ trust is central to Musk’s long-term plan to transform the company from an electric-car maker into a provider of autonomous robotaxis and, eventually, general-purpose robots. For Chinese consumers who have already bought FSD for about 64,000 yuan (roughly US$9,000), the promise of full functionality has been years in the making. Getting that approval will decide whether Tesla can deliver what those drivers paid for and whether it can stem a slide in market share against nimble local rivals.
FSD has been partially approved in China since February. With limited authorisation, the system cannot change gears, which means a car cannot complete a trip from one parking space to another on its own. The software also struggles to recognise some Chinese road signs. Users are effectively paying for the promise of autonomy rather than the reality. Musk said the company is working closely with authorities to adjust the system’s responses to local conditions. Tesla owners in China have complained publicly that paying thousands of dollars for FSD has yielded only incremental benefits over the cheaper autopilot option. Musk knows patience is wearing thin. As he put it to investors at the Austin meeting, approval will come “around February or March or so,” citing discussions with Chinese regulators.
China’s Ministry of Industry and Information Technology has not commented on the timeline. Domestic competitors are already offering robust driver-assist systems at no extra cost. Tesla’s market share in China has slipped to about 8 per cent from a peak of more than 15 per cent two years ago. Analysts attribute much of the drop to the popularity of local models from BYD, Nio and Xpeng that integrate lane-keeping, adaptive cruise control and parking assistance as standard. Without a first-mover advantage in full self-driving, Tesla risks becoming just another foreign brand chasing a crowded field. In a market where digital services and over-the-air updates are the norm, FSD represents more than a piece of software. It is a test of Tesla’s ability to innovate at China’s pace.
Musk’s confidence in securing approval stems partly from concessions Tesla has already made to Chinese authorities. Earlier this year Tesla created a data centre in Shanghai to store driving data locally, easing security concerns about sending information back to the United States. FSD’s partial version restricts certain features until regulators are satisfied with safety protocols. During tests, engineers have adjusted the software’s reaction to local signage, including unique lane markings and variable speed limits. Observers say Tesla’s willingness to collaborate has improved relations with the ministry that oversees industrial policy. However, some note that Chinese regulators may want to see how Tesla handles safety investigations in the United States. The U.S. National Highway Traffic Safety Administration recently opened an investigation into 2.9 million Tesla vehicles after reports of FSD-related crashes. The agency has asked Tesla to explain a more aggressive “Mad Max” driving mode that some drivers reported could exceed speed limits. Chinese officials may wait for the findings before granting full approval.
Consumers in China have followed these developments closely. On social media platforms such as Weibo, drivers post videos of their cars navigating congested city streets, praising FSD’s lane-changing finesse and complaining about its occasional failures to recognise temporary construction barriers. Some recount paying for FSD two years ago and feeling like beta testers. Others believe Tesla’s global fleet data gives the company an edge. One anecdote making the rounds involves a Shanghai driver whose Model Y seamlessly manoeuvred through a labyrinth of delivery scooters. He posted the footage to show that Tesla’s system can handle the chaotic street conditions that often confound other automakers’ systems. The clip went viral, prompting a surge of interest among potential buyers who want to see FSD at full strength.
While the FSD saga plays out, Musk’s compensation and Tesla’s future are tightly interwoven. This week Tesla shareholders approved a record-shattering pay package for the CEO that could be worth up to $1 trillion over the next decade. To unlock the tranches of stock awards, Musk must hit a series of operational and valuation milestones. Those goals include delivering 20 million vehicles a year, deploying 1 million robotaxis, selling 1 million humanoid robots and generating $400 billion in core profit. Musk told shareholders that starting in April Tesla will begin production of the Cybercab, a two-seater steering-less vehicle meant for its robotaxi network. He also noted that Tesla will need a “gigantic chip fab” to supply the AI processors required for autonomous driving. The plan underscores how crucial FSD is to Tesla’s valuation. Without full regulatory approval in China, the company’s path to 1 million robotaxis looks uncertain. The board warned shareholders that Musk might walk away if he did not get his compensation package. The vote showed that investors are willing to give him the resources to pursue his vision of an AI-driven transport empire.
Those stakes also explain why Musk can be impatient. At the Austin meeting he bounded onto the stage with dancing robots and told shareholders that the company was embarking on “a whole new book.” He promised that the upcoming Roadster sports car and the Cybercab would demonstrate the power of Tesla’s new chip architecture. He emphasised that software updates were rolling out to reduce phantom braking and to improve navigation. Tesla has already added more than 5,000 kilometres of Chinese road maps to its FSD database since February. Engineers working at the Shanghai data centre reportedly run simulation loops overnight to fine-tune FSD’s responses to irregular lane markings.
It’s impossible to separate Tesla’s fortunes in China from the broader geopolitical landscape. The United States and China are locked in a strategic rivalry that has ensnared technology firms. In 2021 Chinese regulators forced Tesla to recall cars over battery issues and temporarily barred Tesla vehicles from some government compounds over surveillance concerns. Beijing is also investing heavily in domestic chips and autonomous-driving startups. The fact that Tesla is still the only foreign carmaker with partial approval for high-level driver-assist functions is a sign of trust. Full approval would mean local officials believe that Tesla’s technology aligns with Chinese traffic rules, data-security laws and industrial policy.
Musk has also courted Chinese leaders directly. On a trip to Beijing last year he met Premier Li Qiang and emphasised Tesla’s contributions to the Chinese economy, including thousands of local jobs and billions of dollars in investment. He has praised China’s manufacturing capabilities and occasionally taken swipes at U.S. regulators by comparison. Analysts say that while Musk is one of the few U.S. CEOs who can secure audiences with China’s top leadership, he must balance that access with growing scrutiny in Washington. The Biden administration is reviewing exports of advanced chips and may impose new restrictions on AI technologies. Meanwhile, Tesla’s biggest global competitor, BYD, is expanding into Europe and planning a U.S. factory.
Investors see multiple possible outcomes. In the best-case scenario, Chinese authorities give FSD full approval early next year. Tesla then begins rolling out its promised robotaxi network and starts charging subscription fees that could generate billions in high-margin revenue. That scenario would boost Tesla’s valuation and help Musk achieve his pay milestones. A delay would prolong customer frustration and allow competitors to gain further ground. A denial would be a major setback not just for Tesla but for any foreign company hoping to offer advanced autonomous driving in China.
For now, Chinese Tesla owners watch and wait. They take to apps and forums, comparing notes on the latest software updates, planning road trips to test FSD’s capabilities and complaining when the car fails to read a construction detour. A marketing manager in Guangzhou said she has deferred purchasing a new Model Y until full approval is announced. A taxi driver in Shenzhen who bought FSD on faith said he is “proud to be part of the future,” but he wants the future to arrive soon. Tesla’s share price whips up and down on every Musk pronouncement, yet the real test will come when Beijing’s regulators cast their vote. Until then, Musk’s trillion-dollar ambitions hinge on a regulatory green light from the world’s biggest car market.