Has China Just Banned Tesla?

Is Tesla now banned in China? Not quite. But China has just written the playbook on how to regulate Tesla.

The trigger to China’s sweeping Autonomous Vehicle regulations — just unveiled this week — is Xiaomi, whose horrific crash in March killed three people in Anhui Province.

But don’t conclude that Chinese regulators had Xiaomi on their radar. Tesla, rather, is the target of the new AV guideline.

Without mentioning Tesla, China has figured out how to crack down Tesla’s misbehavior.

Tesla: long revered in China

Among the Chinese — even the government — Tesla has long been a revered vehicle brand. Tesla, after all, was a key accelerator for EV/AV innovation in China.

But the recent wave of AV regulatory moves has signaled a drastic change in Chinese regulators’ attitude toward Tesla. Clearly, China no longer sees much gain in leveraging Tesla as the rabbit in a long-distance AV race. Domestic automakers, BYD, Geely, Nio, Xpeng, Li Auto and others, are rushing to launch new models equipped with ADAS, which the Chinese call “Navigation on Autopilot” (NOA).

In the new guideline, China literally removed — bullet by bullet — all the unfair advantages Tesla created by leading tech innovation on the one hand but playing fast and loose with road safety regulations on the other.

Details of China’s self-driving regulations announced this week include:

• A ban on public beta testing programs

• Strict regulation of marketing terminology

• A ban on remote parking and summoning features

• Enforcement of hands-on requirements

• Tight restrictions on OTA updates

These items, now circumscribed, are the unmistakable features that have long made Tesla “Tesla.” As long as they went unregulated, Elon Musk was able to lift his brand head and shoulder above competitors not only in China but globally.

Changes in the air

The handwriting on the wall was becoming evident even before Xiaomi’s SU7 fatal crash on March 29th.

Tesla had high hopes to proliferate the use of FSD in China by the end of this year. But an FSD trial in China that lasted only one week was abruptly suspended on March 24th

On Weibo, Grace Tao, Tesla’s vice president for China, described the suspension as a “pause,” attributing it to a change in Chinese policy that imposes stricter oversight for NOA software updates.

New regulatory rules enacted in late February by China’s industry ministry had already alerted Tesla and other automakers with autonomous programs that they have to submit detailed technical information before remotely releasing a software update to their fleets. But this was never reported as a permanent crackdown on AVs.

Information on China’s tighter AV regulations was fragmentary until finally updated, clarified and codified by Chinese regulators in a meeting with industry executives on April 17. The government made clear to automakers that China is banning the terms “smart driving” and “autonomous driving” in ads about driver assistance features.

The new rules, however, aren’t just about semantics. Automakers will be no longer allowed to test and improve ADAS via remote software updates for vehicles already delivered to customers without government approval, Reuters reported.

After all, as Phil Koopman, professor at Carnegie Mellon University, once cautioned in a vide podcast I did in the past, over-the-air (OTA) software updates can be miused by vehicle designers to rush out half-baked software on the presumption that it can always be updated later.

Further, China’s new AV regulation says that carmakers must now do enough tests to verify reliability. They will be required to get approval from authorities before AV rollouts.

Tesla protest in 2021

Curiously enough, China had never before come down hard on Tesla for fatal crashes on Chinese roads.

One exception that went viral in social media took place at the Shanghai Auto Show four years ago. A Tesla customer claimed that her parents had been injured due to a “brake failure.” She protested by climbing on top of a Tesla on display at the show, wearing a white T-shirt printed with the words “brake failure.”

The woman ended up with five days in jail, but the incident prompted Tesla to make a rare apology to Chinese consumers for shrugging off customer complaints.

Are the Chinese ahead?

By now, China’s EV industry is widely viewed as lapping its Western counterparts — with better battery technologies and manufacturing prowess, with a supply chain that enables Chinese carmakers to develop, manufacture and deliver new vehicle models at unprecedented speed.

There are industry observers outside China who even credit Chinese ADAS and self-driving vehicle technology with eclipsing Western automakers.

To put it differently, Western AV lobbyists like to use China’s progress as pretext for the United States to relax regulations and “catch up with China.”

In the current climate, it’s difficult to judge how advanced China’s “Navigate on Autopilot” is. But one issue really worries me.

Clearly, China’s updated AV regulations are charting a common sense approach in adopting AVs in ways that take “saving people’s lives” beyond a mere talking point. The bigger question we should be asking: Is the US ready — and serious — about catching up with China on safety?

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