Musk's Tesla may face licensing delays in China amid Trump tariff threats

Chinese authorities may be considering leveraging Tesla's approval process as a strategic tool in ongoing trade negotiations with the US government

Tesla is facing potential delays in securing approval for its autonomous driving technology in China, as the ongoing US-China trade war complicates its regulatory path. The electric vehicle giant, led by Elon Musk, has been informed that there is no clear timeline for obtaining a licence to advance its “full self-driving” (FSD) technology in the country, according to a report by The Financial Times, citing sources familiar with the matter.

 

US-China trade war create hurdles for Tesla

 

Tesla had initially anticipated receiving approval in the second quarter of 2025, a crucial step towards introducing its semi-autonomous features in China. The FSD system, which can accelerate, steer, brake, and change lanes, still requires drivers to remain alert with hands on the wheel. The approval would significantly impact Tesla’s ability to generate subscription revenue and regain momentum in the highly competitive Chinese EV market.

 

However, the escalating trade tensions between Washington and Beijing have cast uncertainty over Tesla’s ambitions.

 

Reports suggest that Chinese authorities may be considering leveraging the approval process as a strategic tool in ongoing trade negotiations with the US government, which recently imposed additional tariffs on Chinese imports. In response, Beijing introduced retaliatory measures, including increased tariffs on American goods.

 

While the approval for FSD in China is still possible, its timing is likely to be influenced by diplomatic developments. A breakthrough in trade talks could accelerate the process.

 

Musk, Trump, and Tesla

 

Tesla’s predicament highlights the challenges posed by Musk’s close ties with US President Donald Trump, to whom he serves as both an adviser and a donor. Musk has personally spearheaded Tesla’s lobbying efforts in China, including a high-profile meeting with Premier Li Qiang in April 2024.

 

Tesla has made some progress in China, with Shanghai authorities permitting limited FSD testing for ten vehicles in June 2024. The company also reached a data-sharing agreement with Chinese tech giant Baidu for mapping and navigation capabilities. However, Beijing’s strict data security regulations remain a key obstacle, as the Chinese government prohibits transferring training video footage outside the country, while US laws prevent Tesla from conducting AI training within China.

 

Chinese EV market

 

Tesla’s push for FSD approval in China comes amid intensifying competition from domestic EV manufacturers. While Musk’s company played a pivotal role in jumpstarting China’s EV sector with the establishment of its Shanghai Gigafactory in 2018, homegrown brands like BYD have since surged ahead with cost-effective models featuring premium technology.

 

Even in the US, Tesla’s FSD technology has yet to receive clearance for fully autonomous driving. While Musk has promised self-driving Teslas on Texas roads by June 2025, the company remains under scrutiny from regulators over safety concerns and potential misrepresentations of the technology’s capabilities.