Breakthrough For Tesla In China? Shanghai Reportedly Greenlights 'Ordinary' Data Flow Overseas For Intelligent Vehicles

Shanghai has reportedly compiled a list of data that can be transferred overseas by companies registered in the city’s free-trade Lingang Area, including EV giant Tesla Inc TSLA, without further security assessments.

What Happened: Shanghai has now allowed transferring certain data without needing further security assessments for companies registered in the city’s free-trade Lingang area under a one-year pilot project, Reuters reported, citing a government document.

Tesla’s Shanghai gigafactory is also located within this area.

The permit allows for ordinary data transfer in the fields of intelligent and connected vehicles, mutual funds, and biomedicine. The data that can be transferred for the auto sector include information involving manufacturing such as procurement and stockpile, research and development including auto design and tests, after-sales services, and used car sales. This list of permissible data will be expanded in time, the report added.

Tesla is also making plans for a data center in China to train its full self-driving (FSD) driver assistance software on fleet data from the country, Reuters reported, citing two people familiar with the matter.

It is unclear if the company is looking to transfer data while also developing a local center or if they are developing the center as a hedge in case they do not receive approvals for road data transfer, the report added. Tesla has been storing data collected from its vehicles in China in Shanghai since 2021.

Tesla’s FSD currently requires driver supervision. The company is looking to train it further on more data from its large fleet of vehicles to enable fully autonomous driving. Road data from China with its complicated traffic patterns and congested cities make it more valuable to automakers, as per Reuters.

Why It Matters: Tesla CEO Elon Musk visited China in late April and met Chinese Premier Li Qiang. Permission for data transfer, as well as the potential for a new data center in the country, was reportedly discussed during the visit.

Musk said during the company's first-quarter earnings call last month that Tesla intends to deploy its FSD in all markets where it can get regulatory approval, including China.

"We’ll make the car drive better in these other countries with country-specific training. But it can drive quite well almost everywhere," Musk said about the software.

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