China’s new Full Self-Driving regulations compound Tesla’s troubles

Tesla has suspended its free Full Self-Driving (FSD) trial in China and will need regulatory approval to resume. The trial’s pause follows China’s policy change, which poses stricter oversight for advanced driver assist system software updates. Earlier this month, Tesla announced that it would grant its Chinese customers a complimentary FSD trial from March 17, 2025, to April 16, 2025. To qualify, drivers would need a Tesla compatible with the EV maker’s FSD hardware and software containing the latest navigation map version, which includes all models manufactured since mid-April 2019. Tesla’s Hardware 3 (HW3), released in 2019, is the company’s third-generation self-driving computer designed to power Autopilot and FSD. HW4 was introduced for Autopilot and FSD programs in 2023.

Despite its name, FSD isn’t actually fully self-driving. Instead, it operates at Level 2 autonomy, according to the Society of Automotive Engineers (SAE). The SAE rates self-driving levels on a scale from 0 to 5, with Level 5 being the most capable. Level 2 autonomy indicates that a vehicle’s technology can automatically assist with steering, braking, or acceleration. However, these automatic features require consistent supervision for a driver to take over in case of an emergency.

The new regulatory rules enacted in late February by China’s industry ministry require Tesla and all other automakers with autonomous programs to submit detailed technical information before remotely releasing a software update to their fleet.

“According to the requirements of the latest ‘Notice on Further Strengthening the Management of Access, Recall and Online Software Upgrade of Intelligent Connected Vehicle Products,’ the team is completing the approval of the 3.0 and 4.0 hardware corresponding to the intelligent assisted driving software,”Grace Tao, Tesla’s Vice-President for the EV maker’s China market, said according to Electrek.

Tesla has been having trouble training its FSD system in China

Tesla released a limited FSD trial in China in hopes of boosting sales for the program, which is priced at RMB 64,000 ($8,823.33). However, Tesla customers in China with Enhanced Autopilot (EAP) can upgrade to FSD for a slightly lower sum of RMB 32,000 ($4,411.66). While Tesla promoted its FSD trial in China to improve business, the company’s stock fell nearly 5% last Monday following news of the incentive—and this isn’t the first trouble FSD has had in China.

Tesla has been unable to train FSD technology from its two million vehicles in the country because of the nation’s strict data laws. Specifically, Tesla has experienced difficulty adapting to China-specific road regulations in areas like bus lanes. In late February, Tesla began releasing advanced driver-assist features in the country, which were sold under its FSD product. Drivers using Tesla’s FSD or Autopilot technology are required to keep both hands on their steering wheel and remain aware of the road and surrounding traffic at all times.

Final thoughts

From significant stock declines to inventory vandalism stemming from public outrage at the EV maker’s CEO, Elon Musk, and now a regulatory roadblock for its FSD China trial, Tesla is having a first quarter to forget. Now, the clock is ticking for Tesla to reintegrate its limited FSD trial promptly, so it’ll be interesting to see how far into the trial’s original release timeline that occurs—if at all.