Tesla’s Rumored Launch of FSD Beta in China Will Likely Be Affected by the Controversy That Its Employees Shared Sensitive Customer Images

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Sometimes it genuinely seems that Tesla’s worst enemies are its own employees and management. As if a number of racial discrimination and sexual abuse allegations were not enough, the company now has to contend with a veritable PR nightmare in relation to a hard-hitting report that Tesla employees inappropriately shared sensitive images of customers. But the ramifications of this bombshell report go much further, having the ability to lock Tesla’s Autopilot out of the fastest-growing EV market in the world – China.

For those who might be unaware, all Tesla vehicles are equipped with cameras that provide navigational assistance. Reuters recently reported that, as per the testimony of a number of former employees, Tesla workers shared sensitive customer images among themselves via the company’s internal messaging system between 2019 and 2022. One such anecdote involved a person who approached a Tesla vehicle in a completely naked state. Another related to a troubling accident involving a bicycle-riding child. Some of the images were also embellished with captions or commentary. Of course, Tesla maintains that its camera recordings remain completely anonymous, bereft as they are of any identifying information. However, some former employees asserted that location data remains accessible. Moreover, one ex-employee maintained that some of the recordings took place even when the Tesla vehicle in question was parked and switched off.

Caixin reports: Tesla is about to start a large-scale test of FSD Beta in China. pic.twitter.com/irJA2H3r5z

— Chris Zheng (@ChrisZheng001) April 4, 2023

While these allegations are quite troubling on their own, it is only when one considers the second-order effects of this development that the true PR nightmare becomes evident. For one, the Chinese publication Caixin recently reported that Tesla was gearing up to begin large-scale testing of its FSD beta in China.

This should be a major stock catalyst for $TSLA and a surprising turn of events:

1.) Caixin pretty reliable

2.) China is on different path re autonomous driving, utilising HD Maps, geofencing, V2X, different sensor sets, granting licenses mostly to domestic companies.

3.)… pic.twitter.com/gpSOwdRkuM

— Marcel Münch 🇨🇳📉📈 (@_mm85) April 4, 2023

Up till now, Tesla had been disadvantaged in China owing to its foreign enterprise status, which comes with heightened regulatory constraints. However, given the solid reputation of Caixin, it appears likely that Elon Musk has been able to satisfy the Chinese authorities vis-à-vis the FSD capability of the Autopilot system.

Nevermind the past, I think there are two ways forward:

1.) Have a compliant process of marking, approving and sending data necessary for training the algos to the US

2.) Replicating the training infrastructure in China and keeping the data domestically.

<- 2.) most likely

— Marcel Münch 🇨🇳📉📈 (@_mm85) April 4, 2023

Of course, the move comes with a host of challenges, including the sensitivity of the Chinese authorities to data privacy. Beijing will never accept a solution where visual data of the Chinese citizens would be sent to the US, even if for the express purpose of training Tesla’s labyrinthine neural network.

Against this backdrop, the latest bombshell from Reuters will likely heighten the sensitivity of the Chinese authorities toward Tesla’s Autopilot system.

BREAKING: @Tesla has reduced the starting prices of the Model S & Model X in the US by up to ~5%.

• Model S AWD: $84,990 (from $89,990)
• Model S Plaid: $104,990 (from $109,990)
• Model X AWD: $94,990 (from $99,990)
• Model X Plaid: $104,990 (from $109,990) pic.twitter.com/h7j4uNsmnM

— Sawyer Merritt (@SawyerMerritt) April 7, 2023

Meanwhile, just ahead of the long weekend in the US, Tesla has again slashed the prices of its EVs. After the company’s ASP declined by around 15 percent in Q1 2023, Tesla has now reduced the price of its Model S and X by up to 5 percent.

Tesla’s base Model 3 has now lost half of the $7,500 federal tax credit due to the IRS’ battery sourcing restrictions. The model uses LFP batteries that are sourced from China.

BREAKING: @Tesla has officially launched a new lower priced Model Y AWD variant in the US on their online configurator for $49,990. Prices also were reduced.

• Model Y AWD: $49,990 (4680 model likely)
• Model Y LR: $52,990 (from $54,990)
• Model Y P: $56,990 (from $58,990) pic.twitter.com/uZbiGK14zL

— Sawyer Merritt (@SawyerMerritt) April 7, 2023

Moreover, Tesla has also launched a new lower-priced AWD variant of the Model Y. The model is rumored to feature the much-anticipated 4680 battery packs. Other variants of the Model Y have received a price cut of around $2,000.

A few days back, Tesla reported that it produced 440,808 units during the first quarter of 2023. Moreover, in what constitutes another record, the company managed to deliver 422,875 units during the pertinent period. However, as we noted at the time, the company’s inventory levels have increased materially, with the Days of Finished Goods Inventory metric rising from 13.51 in Q4 2022 to 16.13 in Q1 2023.

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