Tesla working with Baidu to improve assisted driving system in China, sources say

SHANGHAI/BEIJING (Reuters) -Tesla is working with Chinese tech giant Baidu to improve the performance of its advanced driving assistance (ADAS) system in China, two people with knowledge of the matter said, after a recent update drew customer criticism.

Baidu dispatched a group of engineers from its mapping team to Tesla's Beijing office in recent weeks to work on better integrating Baidu's navigation map information, such as lane marking and traffic light signals, with Tesla's Full Self-Driving (FSD) Version 13 software, the sources said.

The sources did not say how many engineers were sent to Tesla or whether they were still there. They said the aim was to improve FSD V13's knowledge of Chinese roads with more accurate and updated mapping information.

The sources declined to be named because they were not authorised to speak to the media. They did not disclose a financial value to the collaboration.

The deepening relationship with Baidu comes as Tesla navigates data and regulatory restrictions imposed by Beijing and Washington, which have made it tricky for the carmaker to bring full Autopilot and FSD systems to its second largest market.

U.S.-listed shares of Baidu were up about 2%, while Tesla's stock, which gained about 12% in the last two sessions, was down nearly 1% in premarket trading.

In the United States, Tesla's FSD system does not require navigation maps to be accurate or up-to-date, because local training of the AI helps the technology drive better.

But in China, Tesla has been unable to train the system with data from its 2 million EVs because of the country's data laws and the company is under increasing pressure from rivals such as BYD and Xpeng, which offer cheaper vehicles and do not charge an additional fee for similar software.

A deepened partnership with Tesla could also boost Baidu whose other initiatives, including AI, are lagging rivals such as DeepSeek and ByteDance.

Tesla, which is aiming for the full rollout of FSD this year, did not respond to a request for comment. Baidu also did not respond to a request for comment.

The partnership follows a long-awaited but controversial software update Tesla sent to Chinese owners in February. The update added urban navigation features to the system but customers complained it fell short of Chief Executive Elon Musk’s promise of a full FSD rollout in China.

FSD is a suite of driving-assistance technologies developed with generative artificial intelligence to cope with more complicated traffic conditions.

FSD V13 had not received sufficient training for it to adapt well to Chinese roads, one of the sources said, leading to drivers committing frequent traffic violations such as changing to the wrong lane and driving through red lights if they failed to notice and respond.

Tesla has been unable to transfer data collected from Chinese streets to the United States to train the driving system because data laws require the company to store the data locally and seek approval for outbound transfers.

The U.S. also does not allow Tesla to train its AI software in China.

In an earnings call in January, Musk described the situation as a "quandary".

Baidu has supplied navigation maps to Tesla since 2020 and is one of China’s dominant map providers.

Tesla is eager to defend its market share in China as sales plunge in the United States and Europe and local rivals push sales more aggressively.

Tesla's share of China's EV market fell for the first time last year, to 10.4% from 11.7% in 2023, data showed.

The automaker charges a 64,000 yuan ($8,834.04) fee for its assisted driving system on top of EVs priced from $32,500.

($1 = 7.2447 Chinese yuan renminbi)

(Reporting by Zhang Yan, Che Pan and Brenda Goh; Editing by Kate Mayberry and Shreya Biswas)