Bank of America has highlighted the potential impact of Tesla’s Full Self Driving (FSD) technology on the company’s earnings in China, suggesting that it could boost earnings by $2.3 billion by 2030 if widely adopted among the company’s Chinese customers.
Elon Musk’s recent unannounced trip to China has sparked speculation that Tesla is laying the groundwork for the release of FSD in the country. This aligns with Tesla’s partnership with internet giant Baidu for navigation and mapping data, as well as clearance of data security and processing requirements by the China Association of Automobile Manufacturers.
While FSD (Supervised) has been released in the United States and Canada, its most advanced features are currently limited to consumers in these two countries. In China, FSD is available for purchase at RMB 64,000 ($8,800), but subscriptions are not yet offered.
Bank of America suggests that if Tesla were to offer FSD as a $99 service in China, and a quarter of the estimated 1.6 million Tesla drivers in the country subscribe to it, Tesla could generate half a billion dollars in annual revenue, with a gross margin exceeding 70%, potentially resulting in an earnings benefit of ~$350 million.
Bank of America also notes that FSD could potentially be offered for free in China to give Tesla an edge against rivals in the country. Even in this scenario, Tesla would benefit from the neural network training acceleration provided by Chinese FSD users.
“Competition is increasing from domestic manufacturers, and FSD will help Tesla catch up to, and potentially exceed, other EV offerings on the market. Combined with recent price cuts in China, this could spur volume growth,” Bank of America commented.
