Tesla Debuts FSD in China: The Battle for Intelligent Driving Supremacy Begins

February 25, 2025

Tesla (TSLA.US) announced today a phased software update for Chinese customers. The most significant feature of this update is the Autopilot assisted driving capability for urban roads.

Earlier this month, Elon Musk revealed the dual challenges facing Full Self-Driving (FSD) implementation in China during Tesla's earnings call. According to Musk, Tesla faces two major obstacles: training data collected in China cannot be exported out of the country, while U.S. regulations prohibit FSD training within China.

According to Tesla, the Autopilot assisted driving feature will guide vehicles through controlled roads and city streets, navigating exits and intersections based on programmed routes. The system can recognize traffic signals and execute various maneuvers including going straight, turning left or right, and making U-turns. It also performs automatic lane changes based on speed and route requirements. When no navigation route is set, the system selects optimal paths based on real-time road conditions.

 source: Tesla China

Tesla China's official website offers three tiers of Autopilot packages:

1. The premium FSD intelligent assisted driving package priced at 64,000 yuan ($8,850), which can complete most driving tasks with minimal driver intervention

2. The Enhanced Autopilot (EAP) package at 32,000 yuan ($4,425), offering assisted navigation driving, automatic parking, basic summon, and advanced smart summon features

3. The free basic assisted driving package that provides active cruise control functionality

Notably, while "FSD" translates to "Full Self-Driving" in English, Tesla's Chinese website clarifies that all assisted driving features currently require active driver supervision, as vehicles have not yet achieved fully autonomous driving capability. This distinction likely explains the adjusted terminology.

The update comes with two significant limitations:

- Hardware requirements: Only vehicles equipped with the HW4.0 autonomous driving chip are eligible, meaning only Model 3/Y vehicles produced in China after February 2024 or Model S/X vehicles imported to China after December 2023 can receive the update. According to the China Passenger Car Association, this represents less than 20% of Tesla owners in China.

- Software requirements: Customers must purchase the 64,000 yuan FSD package. Even owners of newer eligible vehicles cannot access these features without this package. As of the end of last year, only 7.6% of Tesla owners had opted for FSD.

source: Tesla China

Tesla's FSD entry into China signals the beginning of a comprehensive battle for intelligent driving dominance in the Chinese automotive market. Companies like Huawei, XPeng, and Li Auto have developed the end-to-end technical capabilities and sustained R&D investments necessary to compete directly with Tesla, enabling them to respond to competition through rapid technological iterations.

Currently, Huawei's ADS 3.0 system has achieved fully automated driving from parking space to parking space, while XPeng's XNGP system has garnered exceptional performance and user experience ratings, accounting for over 70% of orders.

After years of anticipation, Tesla's FSD has finally arrived in the Chinese market. This move not only enhances Tesla's competitiveness domestically but also accelerates the transformation of China's new energy vehicle competitive landscape. The industry is transitioning from purely electrification-based competition to intelligence-based competition, officially marking the beginning of the long-discussed "second half" of China's new energy vehicle market.

Most significantly, this development represents not only the prelude to widespread adoption of intelligent driving technology but also potentially the final blow to the traditional combustion engine vehicle market.