Tesla’s TSLA long-awaited rollout of Full Self-Driving (“FSD”) in China marks a major milestone for the tech EV giant as it pushes deeper into the world’s largest auto market. The launch is significant not just because of the technology itself, but also because this move opens up a fresh monetization opportunity for the company at a time when competition in China’s EV market is intensifying rapidly. The rollout follows months of regulatory discussions and comes just days after Tesla CEO Elon Musk accompanied U.S. President Donald Trump on a high-profile visit to Beijing.
China is one of the most important markets for Tesla, accounting for a significant portion of its global deliveries and production. Until now, Tesla’s FSD technology was mainly available in the United States and select international markets, including Canada and parts of Europe, though regulatory hurdles have slowed wider expansion. China’s approval is a major breakthrough because the country has some of the world’s most advanced EV users and highly competitive domestic automakers.
Tesla’s latest rollout in China includes advanced city-navigation capabilities and Level 3-style assisted driving features in certain conditions. While Tesla still markets FSD as a driver-assistance system requiring human supervision, the technology is increasingly moving closer to higher levels of autonomy. Level 3 systems allow the vehicle to handle most driving tasks under specific conditions, though drivers must remain ready to intervene when necessary.
Notably, Tesla’s China strategy also differs from its latest global approach. Per CnEVPost, before FSD officially entered China, Tesla allowed customers to buy the software through a one-time payment of 64,000 yuan (about $9,420). However, in February, Tesla ended one-time FSD purchases globally and shifted to a subscription-only model aimed at building recurring high-margin software revenues. However, Tesla’s China website still shows the one-time purchase option.
Keeping both purchase and subscription models available could help Tesla attract a broader range of buyers. Some consumers may prefer paying once to avoid recurring costs, while others could choose subscriptions for affordability.
The FSD rollout in China signals Tesla’s broader effort to strengthen the ecosystem, expand recurring software revenue opportunities and defend its competitive position in the world’s largest and most important EV market.
XPeng, BYD & Geely Challenge Tesla’s FSD Push
Tesla’s FSD launch in China comes at a time when competition in autonomous driving technology is heating up rapidly. Chinese EV makers like XPeng XPEV, BYD Co Ltd BYDDY and Geely Automobile GELHY are aggressively investing in next-generation smart-driving systems.
Among them, XPeng has emerged as one of Tesla’s strongest software-focused rivals. In March, the company introduced its VLA 2.0 (Vision-Language-Action) system across models such as the P7, G7 and X9 Ultra through over-the-air updates. Unlike traditional assisted-driving systems that separate perception, planning and control, XPeng’s new platform directly converts visual inputs into driving actions using an end-to-end AI model. Powered by the company’s in-house Turing AI chip, the system reportedly improves driving efficiency while significantly reducing sudden braking events. Industry observers view VLA 2.0 as XPeng’s direct answer to Tesla FSD.
Meanwhile, BYD and Geely are pursuing a different strategy by partnering with NVIDIA to develop Level 4 autonomous driving capabilities. Both BYD and Geely plan to use NVIDIA’s Drive Hyperion platform, which combines advanced computing, sensors, AI software, lidar, radar and cameras to support autonomous driving systems. The partnership could help BYD and Geely accelerate their robotaxi ambitions and compete more directly with Tesla and Waymo in the evolving self-driving market.
The Zacks Rundown on TSLA Stock
Shares of Tesla have gained 22% over the past year, underperforming the industry.
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From a valuation standpoint, TSLA trades at a forward price-to-sales ratio of 14.9, above the industry and its own five-year average. It carries a Value Score of F.
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See how the Zacks Consensus Estimate for TSLA’s earnings has been revised over the past 90 days.
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Tesla stock currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
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