FSD Setbacks, Stock Price Plummets: Is Tesla Still Worth the Hype?

Tesla has taken the first step towards introducing its Full Self-Driving (FSD) system in China, but the rapidly evolving Chinese market has already undergone significant changes. On February 25, Tesla began rolling out the “2024.45.32.12” software update to Chinese users, which included upgrades to the city Autopilot (Autopilot) system and optimization of the existing Navigate on Autopilot (NOA) feature. This update allows the system to guide the vehicle off ramps and intersections, identify traffic lights, and perform actions like going straight, turning, or making U-turns at intersections, all while automatically changing lanes based on speed and route. Without a pre-set navigation route, the system will select the most optimal route based on real-time road conditions. The update requires hardware version HW4.0, which is only available on Model Y/3 after February 2024, and new Model S/X vehicles. The feature will be available to customers who paid ¥64,000 for the “FSD Smart Assist” package. This update includes several features of Tesla’s FSD system, leading some to believe that FSD has officially entered the Chinese market. However, it’s important to note that the features launched in China are not identical to Tesla’s full FSD system in the U.S.In the U.S., FSD V13.2 has achieved full “point-to-point” autonomous driving with higher automation levels and more complete functionality. The version launched in China, however, is currently at the L2 level, requiring more driver supervision and intervention. It mainly focuses on specific driving scenarios in urban areas.

Tesla’s official website has also changed the description of the FSD purchase page from “Full Autonomous Driving Capability” to “FSD Smart Assist Feature.” Therefore, this update can only be seen as the first step for FSD’s entry into China, with the full version still a long way off.Tesla’s entry into China has been delayed multiple times due to data security concerns. In July last year, Elon Musk stated that FSD would likely be approved for the Chinese market by the end of 2024. Two months later, Tesla’s official account posted that FSD was expected to launch in China and Europe in the first quarter of 2025, pending regulatory approval. In February this year, reports of further delays emerged. Tesla, which launched its Autopilot feature in China back in 2015, has been a pioneer in autonomous driving technology. However, as Chinese automakers focus on developing and upgrading this technology, the full FSD system’s entry into China is facing significant hurdles.For Tesla, the pressure from local competitors in the Chinese market is growing. Continued delays in launching FSD may result in local car companies seizing market share that was originally Tesla’s. If Chinese consumers were still curious about autonomous driving back in 2015, ten years later, both the concept and experience of this increasingly widespread technology have become commonplace. Particularly after 2025, a wave of “Smart Driving Equality” is reshaping the competitive landscape of technology and the automotive market in China. In early February, BYD Chairman Wang Chuanfu revealed the “Heavenly Eye” technology matrix, covering a full range of products from entry-level to high-end models.

The technology offers different levels of smart driving features across A, B, and C categories, targeting high-end, mid-high-end, and entry-level models, respectively. This move has made high-level intelligent driving features available in cars as affordable as ¥70,000, changing the market norm that “smart driving means high prices.” However, there is some debate about whether the C version of the “Heavenly Eye” system qualifies as high-end smart driving, as it does not support the city NOA (Navigate on Autopilot) function, which is widely regarded as a key feature of high-level smart driving. Additionally, the C version uses a purely visual solution, which may underperform in certain road conditions. Nonetheless, the concept of “Smart Driving Equality” has already made waves in the Chinese market.The day before BYD’s announcement, Changan Automobile Chairman Zhu Huazhong unveiled plans for a new lidar-equipped model in August, which will feature collision avoidance in extreme weather and low-visibility conditions. It will also introduce emergency collision avoidance features for delivery riders and other specific scenarios, with mass production expected by the end of the year. On February 25, Xiaopeng Motors Chairman He Xiaopeng expressed his views on Tesla’s FSD progress, stating that for advanced smart driving to be adopted globally, it must be based on “standard hardware, free software, and frequent OTA updates,” emphasizing the importance of technology equality for intelligent driving. Huawei Executive Director Yu Chengdong has also stated that Huawei’s smart driving technology, even without lidar, outperforms Tesla’s FSD, and the version with lidar delivers even better performance.

Tesla has yet to disclose how many customers have paid for the FSD feature. At ¥64,000, the price of FSD in China is almost on par with BYD’s entry-level models that come equipped with intelligent driving features. This puts Tesla’s FSD in a somewhat awkward position: not only has it lost its early-mover advantage, but it also lacks a price edge, unless it makes significant technological and application advancements. On February 25, Tesla’s stock price dropped by 8.39%, wiping out $89.2 billion in market value overnight. Since the beginning of 2025, Tesla’s stock has fallen by more than 25%. Ross Gerber, an early investor in Tesla, has repeatedly expressed pessimistic expectations about the company’s future. He predicts that Tesla’s stock could fall by over 50% in 2025 due to FSD setbacks, Musk’s divided attention, slowing sales growth, and overvaluation risks. However, Tesla and its CEO have always excelled at marketing, convincing consumers to purchase new technologies. In the current early stage of autonomous driving, many standards remain unclear, such as how different companies classify autonomous driving levels, how to define “advanced smart driving,” and at what point it can be called “full autonomous driving.” Perhaps the answer will come once all market competitors are in place. From this perspective, the full implementation of FSD in China still holds great potential. Ouyang Minggao, an academician at the Chinese Academy of Sciences, expressed confidence that Chinese automakers, by integrating DeepSeek technology, will continue to lead in the field of intelligent driving after the launch of Tesla’s FSD in China.