Tesla's Launch of Self-Driving System in China to Expand Autonomous Tech Adoption in World's Largest EV Market, Analyst Says
Updated: May 23, 2024
Tesla's potential launch of its Full Self-Driving (FSD) system in China is expected to expand the adoption of autonomous driving in the world's largest EV market. Chinese EV buyers currently prioritise other factors over autonomous driving, so Tesla's FSD system is unlikely to disrupt the industry. Tesla's entry into the Chinese market can help make autonomous driving more accessible to consumers.
However, according to a Bank of America (BofA) analyst, it is unlikely to boost domestic car sales due to intense competition.
Ming Lee, head of Greater China Autos Research at BofA Global Research, stated that autonomous driving is not currently a priority for Chinese EV buyers. Therefore, Tesla's FSD system is unlikely to disrupt the industry as local rivals have already begun offering similar technologies. However, Lee believes that Tesla's entry into the market can help make autonomous driving more accessible to consumers.
The speculation surrounding Tesla's FSD launch in China reflects the anticipation for the company's proposed "robotaxi" service, which would test its advanced driver assistance system on the mainland. According to Reuters, Tesla plans to launch its robotaxi service and test the FSD system in Shanghai. Elon Musk, Tesla's CEO, reportedly discussed operating a robotaxi business with China's top policymakers, and it is expected that Beijing will grant Tesla a license to demonstrate positive economic ties with the United States.
Tesla aims to promote its FSD system in China's EV market, which accounts for approximately 60% of global sales. However, the company faces fierce competition and a price war in the country. In April, Tesla reduced prices on its Shanghai-built EVs by over 5%. Despite being the second-largest EV vendor in China, Tesla must contend with aggressive discounts from rivals in a crowded market. BYD, the world's top-selling EV builder, has slashed prices by 5% to 20% on most of its models since late February.
According to BofA's Lee, there are nearly 100 auto brands competing in China, including 70 traditional carmakers. Many of these companies are sacrificing profits to survive by offering steep price cuts. Lee predicts that industry consolidation in the next few years will result in fewer than 30 players remaining in the market. BofA estimates that China's EV penetration rate will reach 50% of new car sales by 2025, compared to the projected 42% for this year. This represents an improvement from last year's 35% penetration rate.
While EV penetration has slowed down in the US and Europe, Moody's Investors Service estimates that new-energy vehicles (NEVs) will account for approximately half of mainland car sales by 2030, compared to a 31.6% adoption rate in 2023. NEVs include pure electric cars, plug-in hybrids, and fuel-cell hydrogen-powered vehicles.
Tesla's potential launch of its Full Self-Driving (FSD) system in China is expected to expand the adoption of autonomous driving in the world's largest EV market.
Chinese EV buyers currently prioritise other factors over autonomous driving, so Tesla's FSD system is unlikely to disrupt the industry.
Tesla's entry into the Chinese market can help make autonomous driving more accessible to consumers.
Source: SCMP