Elon Musk Just Met With Chinese Regulators. Here's Why That's Important.

His discussions with Chinese government officials could have a major impact on Tesla’s future.

Tesla (TSLA 0.66%) CEO Elon Musk has perfected the art of making headlines.

Just a few weeks ago, Musk took to social media to tease a big update for this summer regarding the company’s autonomous driving technology. Well, investors didn’t have to wait too long for Musk to drop more breadcrumbs.

More recently, Musk posted on social media that he’d met with a series of regulators in China.

Many investors may not realize that Tesla has a major presence overseas, and China is one of its biggest markets. Looking ahead, his meetings there could unlock a lucrative opportunity for the company’s ambitions around self-driving vehicles.

Why is China important for Tesla?

China is the world’s largest electric vehicle (EV) market and home to a number of leading manufacturers, including BYD, Nio, and Li Auto.

Despite the intense competitive landscape, the chart below illustrates how Tesla has established a meaningful business in China with revenue from that region reaching $21.7 billion last year.

Geographic breakdown of Tesla's revenue

Image Source: Statista

Now, as demand for EVs stalls amid a challenging macroeconomic backdrop, Musk is turning his sights to a new source of growth. The company’s autonomous driving software, dubbed full self-driving (FSD), has collected over 1.3 billion miles of driver data.

This provides Tesla with a huge competitive advantage and is a major selling point as Musk looks to make FSD a worldwide business.

With his recent visit, the CEO met with Premier Li Qiang and his constituents to iron out a plan for the company to roll out FSD in China, according to Reuters.

While details surrounding the visit are still unfolding, Reuters reported that Tesla will be partnering with Chinese tech giant Baidu to make FSD a reality.

An electric vehicle charging up

Image source: Getty Images.

As part of their relationship, Tesla will be accessing Baidu’s mapping database — an important component in training FSD models.

While there is still a lot to uncover, investors have reason to be very happy if Tesla can become a leader in autonomous vehicles both domestically and abroad. Such success would cement the company as an undisputed leader in artificial intelligence.

Adam Spatacco has positions in Tesla. The Motley Fool has positions in and recommends BYD, Baidu, Nio, and Tesla. The Motley Fool has a disclosure policy.

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