Tesla’s stock surged on Monday following reports that CEO Elon Musk had secured Chinese approval to deploy the automaker’s Full Self-Driving (FSD) autonomous software in the country. This approval, obtained during Musk’s 24-hour visit to Beijing over the weekend, marks a significant milestone for Tesla’s operations in China.
According to the Wall Street Journal, officials informed Tesla of the tentative approval for FSD in China, a move that could potentially boost Tesla’s competitive edge against rivals in the region. In a separate report, Bloomberg noted that Tesla will utilize Chinese tech company Baidu’s street-level mapping data to power its FSD software, a strategic partnership that helped with regulatory approval.
Tesla’s stock closed up 15.3% following the news, reaching its highest levels since March 1 and marking a 30% increase over the past four trading sessions. The introduction of FSD functionality in China not only presents an opportunity for increased revenue for Tesla but also enhances its competitive position against competitors like NIO, Li Auto, XPeng, and tech giants entering the auto market.
Leland Miller of China Beige Book highlighted the importance of innovation for Tesla in the competitive Chinese market, stating, “They have to be the most technologically advanced solution.” The lack of FSD in Tesla’s cars likely impacted its market share in China, which dropped to 6.7% in Q4 of 2023 from 10.5% the previous year, despite aggressive price cuts.
Wedbush analyst Dan Ives described the approval for FSD in China as a “watershed moment” for Tesla, emphasizing the significance of gaining access to the Chinese market for its autonomous driving technology. The approval also allows Tesla to migrate data collected in China to its US-based servers, accelerating the training of its algorithms for autonomous technology globally.
