Tesla is facing potential delays in securing regulatory approval for its Full Self-Driving (FSD) technology in China, as the company gets caught in the escalating US-China trade war.
Despite earlier indications that approval could come in Q2 2025, Chinese authorities have not provided a clear timeline, as per a Financial Times report.
The FSD licence is crucial for Tesla to roll out semi-autonomous driving features in China, which could boost subscription revenues and help counter declining sales in the world’s largest EV market.
The system allows Tesla vehicles to accelerate, steer, brake, and change lanes, but drivers must remain attentive with hands on the wheel.
Trump’s trade war adds to Tesla’s challenges
Tesla initially planned to launch FSD in China and Europe in early 2025, pending regulatory approvals.
However, escalating trade tensions have put those plans at risk.
Earlier this month, China’s Finance Ministry announced new tariffs on US imports, imposing a 15% duty on coal and liquefied natural gas and a 10% tariff on crude oil, agricultural equipment, and certain automobiles.
The move followed an executive order signed by President Trump to impose tariffs on China, citing its failure to curb the flow of illicit drugs into the US.
China’s Finance Ministry also criticized the US for its unilateral tariff actions, accusing it of violating World Trade Organization (WTO) rules.
Chinese regulators are reportedly using Tesla’s FSD licence as a bargaining chip in trade negotiations with President Donald Trump, sources told the news publication.
Musk: a liability for Tesla?
Elon Musk’s close ties to Trump—as a key adviser and donor—could now be working against Tesla in China.
Musk has personally led Tesla’s lobbying efforts in Beijing, including a surprise meeting with Chinese Premier Li Qiang in April 2024.
Despite Tesla securing a testing permit for 10 vehicles in Shanghai and partnering with Baidu for mapping technology, data security concerns remain a major hurdle.
China does not allow training videos to be exported, while US regulations prevent Tesla from training FSD within China.
“We’re in a bit of a bind,” Musk admitted on Tesla’s latest earnings call. “They won’t let us transfer training video outside of China, and the US won’t let us do training in China.”
Tesla’s struggles across the US and China
Tesla’s Gigafactory in Shanghai, launched in 2018, played a major role in China’s EV boom.
However, local competitors have since overtaken Tesla with lower prices and advanced features.
In January 2025, Tesla’s market share in China stood at 4.5%, while BYD, backed by Warren Buffett, led with 27%.
BYD recently unveiled its “God’s Eye” driver-assistance system, posing a fresh challenge to Tesla’s ambitions.
Tesla’s FSD is not yet approved for fully autonomous driving in the US. Musk has claimed Tesla will have self-driving cars on Texas roads by June, but the company faces regulatory investigations into FSD-related accidents.
Musk acknowledged in July 2024 that his past predictions on autonomy have been overly optimistic, but still insists that Tesla’s FSD will be “better than human” by the end of 2025.
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