The CEO of Tesla, Elon Musk, made a surprise visit to Beijing over the weekend, which led to a rally in Tesla’s stock on Monday. Musk reportedly met with a senior government official in China and received tentative approval for the company’s Full Self-Driving (FSD) software. Despite the name, the FSD software still requires human supervision. This news comes as Chinese carmakers are showcasing their latest electric vehicle models at the Beijing auto show. The Wall Street Journal cited anonymous sources familiar with the matter in reporting on the approval of Tesla’s FSD software in China.
Following Musk’s visit and the reported approval of Tesla’s FSD software in China, shares of Tesla Inc. surged more than 15% in afternoon trading on Monday. This increase marked the biggest one-day jump in Tesla’s stock since February 2020. Despite this rally, Tesla’s shares are still down 22% for the year to date. The company has been grappling with a stock slide and slowing production, but it recently announced a newer, cheaper car and a fully autonomous robotaxi as potential catalysts for future growth.
Analysts, such as Dan Ives from Wedbush, view the news of Tesla’s Chinese approval as a significant win for the company. Ives maintained his “Outperform” rating on Tesla’s stock and highlighted the importance of approval to transfer data collected in China abroad for the acceleration of training its autonomous technology globally. Tesla has been storing all data collected by its Chinese fleet in Shanghai since 2021, as required by regulators in Beijing, demonstrating the company’s compliance with local regulations.
In a related development, the U.S. government’s auto safety agency announced that it is investigating whether last year’s recall of Tesla’s Autopilot driving system was effective in ensuring drivers pay attention to the road. Following the recall, Tesla reported 20 more crashes involving Autopilot, according to the National Highway Traffic Safety Administration. This investigation adds a layer of complexity to Tesla’s efforts to deploy its FSD software globally and underscores the regulatory challenges facing the company in the autonomous driving space.
Tesla’s first-quarter net income took a hit, plunging by more than half, but the company remains optimistic about its future growth prospects. With the approval of its FSD software in China and potential for data transfer abroad, Tesla is positioning itself to accelerate the training of its autonomous technology. The company’s ability to navigate regulatory challenges, address safety concerns related to Autopilot, and deliver on its promises for newer, more affordable electric vehicles will be key factors in determining its success in the competitive and rapidly evolving electric vehicle market.
