According to insiders, Tesla is planning to use China's data for its self-driving system's global development. This is a strategic move by Elon Musk.

Tesla has been secretly working on plans for a data center in China. This data center is part of their effort to train the algorithm needed for fully autonomous vehicles.

Tesla has been focused on obtaining approval from Chinese regulators to transfer data from its electric vehicles (EVs) outside of China for its "Full Self Driving" (FSD) system, according to two individuals and a third source familiar with the matter.

It was unclear if Tesla planned to proceed with data transfer and a local data center or if it was making contingency plans for handling self-driving data from China in case the original plan didn't work out.

Tesla quickly changed its strategy from focusing on electric vehicles to betting on AI advancements during a time of reduced EV demand and increased competition.

The manufacturer wants to improve its driving artificial intelligence by using more data from Chinese cars, which aligns with US government efforts to limit the transfer of AI technology from American companies to Chinese ones.

The full version of FSD, which retails for about $9,000, is not available in China for Tesla.

A bigger FSD market in China would help the automaker face pressure from Chinese competitors like BYD, impacting revenue and profits.