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Tesla Collaborates with Baidu to Improve Assisted Driving in China

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Tesla is working with Baidu, a Chinese tech giant, to enhance the performance of its advanced driving assistance system (ADAS) in China, according to two sources familiar with the matter. This collaboration follows criticism from customers over a recent update to Tesla’s Full Self-Driving (FSD) Version 13 software, which failed to meet expectations.

Baidu has sent a team of engineers from its mapping division to Tesla’s Beijing office to improve the integration of Baidu’s navigation maps with Tesla’s FSD V13. The goal is to refine the system’s understanding of Chinese roads, including lane markings and traffic light signals, making it more accurate and up-to-date. The exact number of engineers or the financial terms of the collaboration were not disclosed.

This partnership comes as Tesla faces challenges with data and regulatory restrictions imposed by both Beijing and Washington, hindering its ability to bring its full Autopilot and FSD systems to its second-largest market. Unlike in the U.S., where Tesla trains its AI with data from its own fleet, it cannot do so in China due to local data laws. This has led to increasing pressure from competitors like BYD and Xpeng, which offer similar technology without charging extra fees.

The updated software, released in February, aimed to add urban navigation features but faced backlash for not delivering the promised full FSD functionality in China. Tesla’s FSD V13 had not been sufficiently trained to navigate Chinese streets, causing drivers to encounter frequent traffic violations such as incorrect lane changes and running red lights.

The partnership with Baidu, a dominant map provider in China, aims to resolve these issues by improving the mapping capabilities and providing more accurate navigation data. Tesla has been relying on Baidu for mapping services since 2020.

This collaboration comes as Tesla’s market share in China declined for the first time last year, dropping from 11.7% to 10.4% in 2024, according to recent data. Meanwhile, local competitors have been pushing sales more aggressively. In the U.S. and Europe, Tesla has faced a slowdown in demand, putting further pressure on its performance in China.

Despite the regulatory challenges and competition, Tesla remains focused on rolling out full FSD technology in China this year. However, it remains unclear how soon the collaboration with Baidu will lead to a resolution of the system’s issues.

Tesla Shares Rise as Musk Promises Cheaper EVs and Autonomous Ride-Hailing

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Tesla shares climbed more than 2% on Thursday after CEO Elon Musk announced plans to launch lower-cost electric vehicles (EVs) in the first half of 2025 and begin testing an autonomous ride-hailing service in June. These commitments helped investors look past a weaker-than-expected fourth quarter, which saw declining revenue and shrinking margins due to delayed model upgrades and rising competition.

Despite Tesla’s first annual decline in deliveries in 2024, the company assured investors that its vehicle business would return to growth in 2025. However, Tesla did not reaffirm Musk’s earlier forecast of a 20-30% sales increase for next year.

Morgan Stanley analysts noted that Tesla is shifting from being a traditional automotive company to a diversified player in AI and robotics. Investors remain optimistic, especially as Musk’s support for U.S. President Donald Trump could lead to more favorable regulatory conditions for Tesla’s robotaxi ambitions.

Musk revealed that Tesla will begin unsupervised testing of its autonomous ride-hailing service in Austin, Texas, though he did not provide specific details on how it would function. The company also did not share pricing details for its upcoming affordable EV models.

If Tesla’s stock gains hold, its market value could rise by approximately $28 billion. The stock surged 62.5% in 2024 and is currently trading at 118 times its 12-month forward earnings, significantly higher than Ford (6.07) and General Motors (4.48).

At least 19 brokerages have raised their price targets for Tesla stock, with a median target of $300, up from $278 at the end of December. Analysts believe that Tesla’s growth will be fueled by Full Self-Driving technology and the introduction of an affordable EV. However, some experts remain cautious about Musk’s timeline for launching robotaxis, citing regulatory challenges, particularly in Europe and China.

Tesla also announced an increase in its capital expenditure forecast, expecting to spend over $11 billion in 2025 and the following two fiscal years.

 

Indian Fintech Paytm Eyes Profitability Within Two Quarters Amid Operational Recovery

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India’s leading fintech company, Paytm, announced plans to achieve profitability within one to two quarters following a narrower adjusted loss in the third quarter, as its payments business shows signs of recovery after regulatory setbacks.

Financial Performance Highlights

For the quarter ending December 31, 2024, Paytm reported:

  • Adjusted loss: ₹2.04 billion ($23.6 million), down from ₹4.07 billion in the second quarter.
  • EBITDA (excluding employee stock option costs): Negative ₹410 million, a significant improvement from a negative ₹1.86 billion in the previous quarter.
  • Revenue growth: Operational revenue rose 10.1% sequentially to ₹18.28 billion, driven by:
    • Financial services (including lending): Up 34%.
    • Payment services: Up 8%.
  • Reduced expenses: Down 31% year-on-year and 1% sequentially, primarily due to decreased marketing and employee-related costs.

The company’s Chief Financial Officer, Madhur Deora, expressed confidence in achieving profitability at the PAT (profit after tax) level once its EBITDA metric turns positive.

Operational Challenges and Recovery

In January 2024, the Reserve Bank of India shut down Paytm’s payments bank unit over compliance issues, raising concerns about the company’s digital payments business. However, Paytm’s recent performance suggests a turnaround, with Rahul Jain, Vice President of Research at Dolat Capital, stating, “Paytm’s fundamentals are improving, and regulatory hurdles appear to be largely behind us.”

The company also increased its default loss guarantee for merchant loans disbursed through its lending partner, SMFG India Credit, from ₹2.25 billion to ₹3.5 billion, signaling confidence in the growth of its lending business.

Strategic Focus

  • Lending Business: While its partners remain cautious on unsecured lending, Paytm expects steady growth in merchant loans.
  • Cost Optimization: Reduced marketing and employee expenses have contributed to narrowing losses and improving financial health.

Outlook

With rising operational revenues, controlled expenses, and easing regulatory challenges, Paytm is optimistic about reaching profitability in the near term. The company’s strategy to expand its lending business and maintain financial discipline positions it for sustainable growth in India’s fintech market.