*

Baidu ( BIDU ) engineers work with Tesla in Beijing to improve FSD

navigation map - sources

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Tesla delivered FSD V13 in China without sufficient local

data

training - source

*

Some Chinese customers said update fell short of Musk's

promises

on FSD

(Adds shares in paragraph 6)

SHANGHAI/BEIJING, March 13 (Reuters) - Tesla is

working with Chinese tech giant Baidu ( BIDU ) to improve the

performance of its advanced driving assistance (ADAS) system in

China, two people with knowledge of the matter said, after a

recent update drew customer criticism.

Baidu ( BIDU ) dispatched a group of engineers from its mapping team

to Tesla's Beijing office in recent weeks to work on better

integrating Baidu's ( BIDU ) navigation map information, such as lane

marking and traffic light signals, with Tesla's Full

Self-Driving (FSD) Version 13 software, the sources said.

The sources did not say how many engineers were sent to

Tesla or whether they were still there. They said the aim was to

improve FSD V13's knowledge of Chinese roads with more accurate

and updated mapping information.

The sources declined to be named because they were not

authorised to speak to the media. They did not disclose a

financial value to the collaboration.

The deepening relationship with Baidu ( BIDU ) comes as Tesla

navigates data and regulatory restrictions imposed by Beijing

and Washington, which have made it tricky for the carmaker to

bring full Autopilot and FSD systems to its second largest

market.

U.S.-listed shares of Baidu ( BIDU ) were up about 2%, while Tesla's

stock, which gained about 12% in the last two sessions, was down

nearly 1% in premarket trading.

In the United States, Tesla's FSD system does not require

navigation maps to be accurate or up-to-date, because local

training of the AI helps the technology drive better.

But in China, Tesla has been unable to train the system with

data from its 2 million EVs because of the country's data laws

and the company is under increasing pressure from rivals such as

BYD and Xpeng, which offer cheaper vehicles and do not charge an

additional fee for similar software.

A deepened partnership with Tesla could also boost Baidu ( BIDU )

whose other initiatives, including AI, are lagging rivals such

as DeepSeek and ByteDance.

Tesla, which is aiming for the full rollout of FSD this

year, did not respond to a request for comment. Baidu ( BIDU ) also did

not respond to a request for comment.

The partnership follows a long-awaited but controversial

software update Tesla sent to Chinese owners in February. The

update added urban navigation features to the system but

customers complained it fell short of Chief Executive Elon

Musk's promise of a full FSD rollout in China.

FSD is a suite of driving-assistance technologies developed

with generative artificial intelligence to cope with more

complicated traffic conditions.

FSD V13 had not received sufficient training for it to adapt

well to Chinese roads, one of the sources said, leading to

drivers committing frequent traffic violations such as changing

to the wrong lane and driving through red lights if they failed

to notice and respond.

Tesla has been unable to transfer data collected from

Chinese streets to the United States to train the driving system

because data laws require the company to store the data locally

and seek approval for outbound transfers.

The U.S. also does not allow Tesla to train its AI software

in China.

In an earnings call in January, Musk described the situation

as a "quandary".

Baidu ( BIDU ) has supplied navigation maps to Tesla since 2020 and

is one of China's dominant map providers.

Tesla is eager to defend its market share in China as sales

plunge in the United States and Europe and local rivals push

sales more aggressively.

Tesla's share of China's EV market fell for the first time

last year, to 10.4% from 11.7% in 2023, data showed.

The automaker charges a 64,000 yuan ($8,834.04) fee for its

assisted driving system on top of EVs priced from $32,500.

($1 = 7.2447 Chinese yuan renminbi)