Tesla’s stock experienced a remarkable surge on Monday, following CEO Elon Musk’s surprise visit to Beijing over the weekend, where he reportedly secured tentative approval for the company’s driver-assistance software.
During his visit, Musk met with a senior government official in Beijing, coinciding with the Beijing auto show, where Chinese carmakers were showcasing their latest electric vehicle models. According to sources cited by The Wall Street Journal, Chinese officials tentatively approved Tesla’s plan to launch its “Full Self-Driving” (FSD) software feature in the country.
Despite its name, the FSD software still requires human supervision, a point underscored by concerns raised by the US government’s auto safety agency regarding Tesla’s Autopilot system. The agency is investigating whether last year’s recall of Tesla’s Autopilot adequately addressed the need for drivers to pay attention to the road, especially following 20 additional crashes involving Autopilot reported by the National Highway Traffic Safety Administration since the recall.
Tesla’s stock surged more than 15 per cent at the close of trading, marking its largest one-day jump since February 2020 and adding approximately $82 billion to its market capitalization. However, shares remain down 22 per cent for the year to date.
The rally comes amidst Tesla’s efforts to address challenges such as its declining stock value and slowing production. Despite reporting a significant drop in first-quarter net income last week, Tesla remains optimistic about future growth, citing the introduction of a newer, more affordable car and plans for a fully autonomous robotaxi.
Wedbush analyst Dan Ives described the news of China’s FSD approval as a “home run” for Tesla, maintaining an “Outperform” rating on the stock. Ives highlighted Tesla’s compliance with Chinese regulations, noting that the company has stored all data collected by its Chinese fleet in Shanghai since 2021.
Ives also emphasized the potential significance of obtaining approval to transfer data collected in China abroad, stating that it could accelerate the training of Tesla’s algorithms for autonomous technology on a global scale.
Tesla’s stock market rally reflects investor optimism following Musk’s successful negotiations in China, signaling potential growth opportunities for the electric vehicle manufacturer as it continues to navigate both domestic and international markets.
