Tesla waits longer than planned in China for the green light for its "full self-driving" (FSD) system. According to company sources, there is no longer a binding timeframe from the authorities, although Elon Musk's electric car manufacturer had initially hoped for approval in the second quarter of 2025. The approval is of central importance for offering the expensive semi-autonomous option in China — and thus selling urgently needed subscriptions and stabilizing declining revenues in the world's largest electric car market.

The backdrop is heightened tensions between Washington and Beijing. According to insiders, Chinese decision-makers are considering using the approval of the FSD system as a bargaining chip in the trade conflict with U.S. President Donald Trump, who recently imposed new tariffs on Chinese goods. China responded with countermeasures. For Tesla, this stalemate is a dilemma: Musk is considered a close advisor and supporter of Trump, which gives him political access in the U.S. but could jeopardize his business in China.

Tesla specifically focused on China. In Shanghai, Musk had his largest factory built to date in 2018, which fueled the Chinese electric car sector. However, local rivals like BYD have since overtaken Tesla in terms of market share and model offerings: According to the China Passenger Car Association, only 4.5 percent of new electric car sales in January were attributed to Tesla, while BYD achieved nearly 27 percent and introduced its own advanced driver assistance system called "God's Eye.

Even if China does grant the FSD license, fundamental hurdles remain: Neither do Beijing authorities want large amounts of video data to flow abroad, nor does the White House allow Tesla to train its adaptive system in China. Musk described this as a "dilemma" and holds both Washington and Beijing equally responsible for the stalemate. Additionally, Tesla is under increased scrutiny in the US itself: The traffic safety authority is investigating several accidents involving FSD, and Musk has to face criticism for exaggerated promises about the progress of the technology.

In the face of shrinking margins and growing competition, Tesla hopes for new revenue from the subscription model of the FSD function. But uncertainty over trade relations and data requirements is slowing down this endeavor – and could further cost the US company market share in China.