Tesla shares rise on 'watershed' full self-driving approval in China

Shares of Tesla ( TSLA ) rose on Monday following reports that CEO Elon Musk has received Chinese approval for the automaker's fully self-driving (FSD) autonomous software to be used on land.

As originally reported The Wall Street JournalDuring Musk's 24-hour trip to Beijing over the weekend, officials told Tesla they had provisionally approved FSD in the country, people familiar with the matter said.

Separately, Bloomberg Tesla previously announced that it will use street-level mapping data from Chinese tech giant Baidu to power the FSD. Tesla previously used Baidu's mapping data for satellite navigation in its cars. Reports say that working with a Chinese company has helped with regulatory approval as data privacy and security risks are minimized.

Tesla closed up 15.3%, hitting its highest level since March 1. Tesla stock is now up 30% over the past four trading sessions.

While pricing for the FSD in China has not been disclosed, in the US, Tesla charges $8,000 upfront for lifetime use (down from $12,000) and $99 a month for subscription services.

Adding an FST operation in China not only gives the automaker additional revenue, but also gives Tesla a competitive edge against tech giants like NIO, Li Auto, XPeng and Xiaomi. Entering the automation market with automation software.

“What Tesla needs to do is be at the forefront of innovation. They need to be the most technologically advanced solution,” Leland Miller, a China expert at China Page Book, told Yahoo Finance. “We have a domestic market that's saturated, and there's a price war going on … [Tesla] To be at the top of the technological ladder.”

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The lack of FST in Tesla's cars could hurt recent sales in China Technical aspects are prioritized. Passenger Car Association of China, Tesla's share of the China market fell to 6.7% in Q4 2023, down from 10.5% a year earlier. Globally, Tesla's Q1 deliveries fell to 387K units from 423K a year ago.

Still, the preliminary approval for FSD and the data deal with Baidu are two big wins for Tesla.

In this photo released by Xinhua News Agency, Tesla founder and CEO Elon Musk, left, meets with Chinese Premier Li Keqiang in Beijing, Sunday, April 28, 2024, as the country's automakers showcase their latest electric vehicle models at the Beijing Auto Show.  (AP via Wang Ye/Xinhua)

Tesla CEO Elon Musk meets Chinese Premier Li Qiang in Beijing, Sunday, April 28, 2024. (Via Wang Ye/Xinhua AP) (Associated Press)

“Winning Musk FST approval in the key Chinese market is a pivotal moment for the Tesla story in our view,” Wedbush analyst Dan Ives said in a note to investors, adding that it was a “home run” for Musk. “While the long-term valuation story at Tesla revolves around FSD and autonomy, one key piece missing from that puzzle is Tesla's availability of FSD in China, which is now complete.”

Tesla's focus on autonomous driving and even its robotaxi future are seen as long-term catalysts for the company, as its shareholder class returns and Trade is significantly lower Just in the last two weeks.

A key part of Tesla's development of its AI-powered autonomous software is the collection of vast amounts of data to feed into its software model. Tesla has been required to store its data in China since 2021 under a regulatory requirement, Ives noted.

Further approval for Tesla to transfer that data in China to its U.S. servers will “accelerate the training of its algorithms for its autonomous technology around the world,” Ives said. Also, China-based FSD users may be more inclined to choose this service and use it more frequently. The government has promoted self-driving in various areasThis gives Tesla more data to improve its FSD software.

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Press Subramanian is a Yahoo Finance reporter. You can follow him Twitter And on Instagram.

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