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Musk Plans Data Centre To Power Tesla’s AI Ambition

Tesla is moving forward with plans to power the global development of its self-driving system with data from China that could be processed within the nation, according to sources.

TakeAway Points:

  • Tesla is pushing ahead with plans to power the global development of its self-driving system with data from China that could be processed within the country, part of a strategic shift by Elon Musk.
  • The company has up until recently concentrated on trying to get Chinese regulators to approve the transmission of data produced by its EVs in China outside of the nation for its “Full Self Driving” (FSD) system.

Musk’s Data Centre in China

According to the report, Tesla has been designing plans for a data centre in China to train the algorithm required for more fully autonomous vehicles.

The company has up until recently concentrated on trying to get Chinese regulators to approve the transmission of data produced by its EVs in China outside of the nation for its “Full Self Driving” (FSD) system.

It was unclear whether Tesla intended to move forward with data transmission and a local data centre, or if it was creating backup plans in case things did not work out, in order to handle self-driving data from China.

In a time when demand for EVs has decreased and competition has intensified, Tesla’s actions highlight how quickly the manufacturer of electric vehicles has shifted its strategy to wager on an advancement in AI.

The manufacturer is attempting to enhance its artificial intelligence for driving by utilising more data from Chinese automobiles, a move that coincides with efforts by the US government to restrict the transfer of AI technology from American companies to Chinese ones.

The full version of FSD, which is priced at approximately $9,000, is not available from Tesla in China.

An expansion of the FSD market in China would help the automaker’s earnings and sales at a time when both are under pressure from BYD and other Chinese competitors.

Telsa to Partner with Chinese for Data Centre

According to two of the individuals, Tesla would need to collaborate with a Chinese partner in order to establish a data centre for FSD research in China. Another possible issue is finding hardware suppliers.

One of the people who was informed about the conversations said that it has had discussions with Nvidia over the purchase of graphics processing units for a data centre in China. The most cutting-edge chips from Nvidia and its partners cannot be sold in China because of U.S. sanctions.

After Elon Musk met with Premier Li Qiang and other authorities during a quick trip to Beijing last month, Tesla’s effort to leverage more data from China was put into high gear.

According to two of the sources, Musk wanted to expedite approval for Tesla’s data transfer during his meeting with Li. They also mentioned the possibility of Tesla funding a data centre in China.

Musk also touched on the subject of Tesla potentially licencing its FSD technology to Chinese EV manufacturers. Without naming the company, Musk had stated in April that Tesla was in talks to licence FSD with another “big” automaker.

Impact in China

China, the largest automobile market in the world, has the greatest fleet of sensor-equipped vehicles that can gather data from clogged cities with intricate traffic patterns. As a result, data gathered there is important to automakers and artificial intelligence companies.

According to two people, Musk had previously stated that he was against a data centre located in China, claiming that data transfer to the US was the most effective solution.

Tesla has kept data gathered from its Chinese electric vehicles in Shanghai since 2021. According to two people, Tesla’s China team has been requesting permission from Chinese authorities to export data outside of the nation during that time.

Companies in Shanghai’s Lingang Area—home of Tesla’s factory—will be able to transfer specific data without requiring further security evaluations as part of a one-year pilot experiment, according to Reuters on Friday.

According to some analysts, Musk wants to use China as a testing ground for self-driving technology, much like how Tesla was able to become a successful mass-market electric vehicle manufacturer thanks to its 2019 wager on its Shanghai Gigafactory.

“It would definitely be a milestone for Tesla if it rolls out FSD in China and leverages the China data for algorithm training,” said Yale Zhang, managing director at Shanghai-based consultancy Automotive Foresight.

“China had played a key role in scaling up EV production for Tesla with the Shanghai factory. It would again serve a significant part in scaling up mass adoption of autonomous driving technologies,” he added.

Although estimates vary greatly, many industry experts believe it will take years before completely autonomous cars become the norm.

China’s Level Two Driver Assistance

China is now offering “level two” driver assistance functions, which means a driver must be prepared to take over. Level-two systems that demand careful driving include Tesla’s FSD and its less sophisticated Autopilot alternatives.

Limited test zones are used by, an autonomous driving startup, and Baidu, the largest search engine operator in China, to run fleets of more fully automated vehicles.

However, improved driver assistance systems and self-driving capabilities have become top priorities for Chinese EV manufacturers, such as BYD. Licences to test level-three systems, which enable drivers to take their hands off the wheel and gaze away on a greater variety of Chinese roads, have been granted to Mercedes and BMW.

Lawyers, state media sources, and experts claim that at least five automakers—Hyundai, Mazda, Toyota, Volkswagen, and Nissan—have permission to export a portion of their data outside of China. However, none of these permissions pertain to the use of data for AI system training.

Organisations that advocate for foreign companies operating in China claim that the penalties for breaking China’s new data privacy regulations, which went into force in 2021, pose a serious risk to data operations.

Tesla to be seen as AI Firm

During a conference call with investors following Tesla’s quarterly results last month, Musk was asked about competition from Chinese EV manufacturers and said that Tesla should be seen more as an AI firm.

He expressed confidence in the FSD technology of Tesla, saying it will function “very effectively without modification in practically any market.” According to Musk, it would function better with “country-specific” training.

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