Videos of local media and KOLs livestreaming smarter assisted driving capabilities of Teslas in China soon after the U.S. EV maker pushed out a long-awaited software update to eligible vehicles in the country on Tuesday — many calling it the “FSD” rollout in China — have made the rounds on social media both in China and the U.S.
And the early verdict is in: it’s pretty good, with lots of bugs of course, but nevertheless pretty good — even surprisingly good in certain driving scenarios — especially given the fact that Tesla in China, unlike other competitors in the space, is in a bind because of restrictions of data/training transfer on both sides of the pacific.
In fact, Elon Musk reiterated again in a post on X responding to another post on Tuesday that Tesla “just used publicly available video on the Internet of roads and signs in China and used that to train in sim,” like what he said in the most recent earnings call about getting FSD approval in China.
FSD, or full self-driving, is Tesla’s term for its advanced driver assistance system (ADAS) where the vehicle does the driving under most, if not all, driving scenarios but still requiring the driver to always pay attention. In SAE jargon that’s still Level 2 but in the industry its known as Level 2+, or Level 2++, or Level 2+++, you get the point. In recent years, Tesla has added “(Supervised)” to the term to make clear of that fact. On Tesla’s website, the fine print says under Full self-driving (Supervised): your car will be able to drive itself almost anywhere with minimal driver intervention. The key qualifier being minimal driver intervention.
Whereas in the U.S. Tesla is all alone in this department of advanced levels of automated driving, it’s much more cutthroat in China where multiple brands already offer smart driving capabilities like, if not better than, FSD (Supervised). Huawei, Li Auto and Xpeng (maybe Xiaomi) right now are the front runners when it comes to offering the so-called all-scenario Navigate on Autopilot (NOA) features covering both highway and urban road conditions. The race right now among these leaders of the pack is to push out the so-called parking space to parking space automated driving features covering all road conditions minimizing driver intervention, but still Level 2, like what the latest FSD Supervised can do in the U.S.
“NOA available anywhere you drive, day or night” right now is the name of the game.
I have watched some of the livestreams, happening day and night the last couple of days and stressing the system (e.g. going through tight Hutongs in Beijing or going through the so-called “city villages” in some of the southern cities like Guangzhou/Shenzhen).
Here are some of my takeaways:
Most of the media/KOLs that have done the tests have been impressed with the capabilities of this initial iteration given Tesla’s data collection/transfer limitations in China. The system performs especially well in easier scenarios like highways and ring roads where traffic is less complex. Also, quite impressive in certain urban scenarios but system quite conservative in yielding to pedestrians on crosswalk or yielding to parked/incoming vehicles.
Where the system lacks is the understanding of local traffic rules (such as no use of shoulder/bike lanes on turns, similar to the bus lane rules that Elon talked about in the most recent earnings call) and the sporadic use of wrong lanes (e.g. going straight in a left or right turn only lane) or navigation showing vehicle in one lane when in fact it’s in another, or wrong perception of objects (red balloons as traffic lights). Many of the livestreams were counting the amount of traffic violations from the vehicle and the number of points that would have been taken off or licenses suspended (12 points = suspension) as a result.
The consensus seems to be that this initial version of “FSD” does not catapult Tesla into the first camp of leaders of smart driving. And the “FSD” China capabilities at this point is nowhere near the latest version in the U.S., but impressive nonetheless given Tesla’s data collection limitations in China.
But here’s the catch: of the hundreds of thousands of Tesla owners in China, only a few thousand of those owners, to the best of my knowledge, have access to the initial version of the “FSD.” A reminder that to gain access, an owner must have its vehicle running on HW4.0 AND have purchased the “FSD” software package (V13.2.6) which cost RMB64,000 or $8,800 in China. And, the system must be running on the latest Baidu map software, which is included in the software update. Many Tesla owners in China had bought FSD as far back as 2019 on HW3.0 which means they won’t be able to use it at least in its current format.
So going forward, the dilemma for Tesla is figuring out two things to democratize this feature (if this is its aim) for more customers in China (a more significant share of them has HW3.0):
1. Subscription model (RMB64,000 upfront cost is too high given competition) or discounted variations;
2. Make it available for HW3.0 (which I’m hearing is being planned).
On a bigger scheme of things, this “FSD” update in China only qualifies Tesla to have a seat at the table among the leaders of the pack, it doesn’t separate itself from the rest of the pack, if we are talking about all-scenario L2++ automated driving (and democratizing it, which Tesla is still behind). This competitive track in 2025 will be white hot with more players joining (e.g. BYD God’s Eye/DiPilot, Mercedes L2++, Zhuoyu or DJI Auto, Momenta, DeepRoute, Horizon Robotics SuperDrive, etc.).
A small win for FSD, but a bigger win for smart driving in China.
It will be interesting to see how fast “FSD” capabilities in China can be iterated from now on given the limited number of vehicles that will actually have access to the initial and later iterations of the feature, and what Tesla will do (and sacrifice) to democratize, if at all, the feature in China.
After all, democratizing and standardizing higher levels of automated driving was the message from arch-rival BYD earlier this month when it rolled out the base versions of God’s Eye assisted driving systems to 21 models across its Dynasty and Ocean network models, FREE OF CHARGE. And the same message has come from He Xiaopeng, Li Xiang among others as they up the ante in their own smart driving game and openly invite the media to comparison test Tesla’s “FSD” with advanced NOA capabilities of their own vehicles, which they believe are much more superior.
Tesla is facing immense pressure to grow volume this year given the recent political backlash from Elon Musk as well as general slowdown in EV uptake in various markets of the world. China becomes even more crucial as local deliveries of the new Model Y began today with the cheaper “Model Q” hon the horizon for both China and the rest of the world.
Getting FSD tactically right and getting it available to more customers in China despite the challenges of data restrictions could come a long way in helping Tesla at least maintaining strong volumes in its largest and most crucial market.
