Tesla’s plans to roll out Full Self-Driving (FSD) in China is facing a new potential hurdle, as regulatory approval is now reportedly entangled in the ongoing U.S.-China trade war. Chinese authorities are reportedly considering using Tesla’s FSD license approval as a bargaining chip in negotiations with U.S. President Donald Trump, following heightened tariffs on Chinese imports.
Trade Tensions Threaten Tesla’s FSD Timeline
Tesla initially aimed to launch its FSD technology in China and Europe by early 2025, but this timeline is now in doubt. The Chinese government has reportedly not provided a definitive schedule for approving Tesla’s FSD license. The uncertainty comes after the U.S. imposed a 10% additional tariff on Chinese imports, prompting China to consider countermeasures, including delaying regulatory approvals for American companies like Tesla, according to a report from The Financial Times.
Industry insiders suggest that the Chinese government could withhold Tesla’s FSD approval unless a major trade concession is made by the U.S. administration.
Regulatory and Technological Challenges
Beyond trade tensions, Tesla also faces significant regulatory and technological barriers in deploying FSD in China. As we have previously reported, one key issue is data handling. Chinese authorities do not currently allow Tesla to transfer training video data outside the country, limiting the company’s ability to refine its autonomous driving algorithms. Meanwhile, U.S. regulations prevent Tesla from conducting AI training within China, creating a unique dilemma.
Elon Musk acknowledged these hurdles during Tesla’s Q4 2024 earnings call, stating:
“They won’t currently allow us to transfer training video outside of China. And then the U.S. government won’t let us do training in China. It’s a bit of a quandary.”
Musk outlined several other hurdles to get FSD approval in China, you can read more about those here.
Tesla’s Investments in China
Since opening its Shanghai Gigafactory in 2018, Tesla has been deeply invested in China, viewing it as a crucial market for growth. However, its relationship with Chinese regulators has become increasingly complex, particularly as geopolitical tensions between China and the U.S. escalate.
Adding to the uncertainty is Musk’s close relationship with President Trump, a factor that could complicate negotiations. While Musk has personally lobbied Beijing for smoother regulatory pathways, his association with Trump’s administration may now be working against Tesla’s interests in China.
Highlighting the difficulties in getting approval for FSD in China and Europe, Tesla unexpectedly expanded FSD to Mexico last week, despite no indications from the company it was near to releasing the self-driving technology south of the border.
