Updated at 9:40 AM EDTTesla (TSLA) shares powered higher Monday after the electric-car maker won a key endorsement for the rollout of its driver-assistance technologies in China following Chief Executive Elon Musk's surprise weekend visit to Beijing.Musk is looking to use Tesla's driver-assistance technology, which it calls Full Self-Driving (FSD), as both a key plank in its longer-term growth story and an offset to slumping electric vehicle sales in key markets worldwide.The world's second-richest man traveled to Beijing Sunday as part of an unannounced visit that included a face-to-face meeting with Premier Li Qiang as he looks to persuade officials to both allow the rollout of FSD technologies in the world's biggest car market and potentially export the data it collects into Tesla's nascent AI-powered data centers.The China Association of Automobile Manufacturers (CAAM) provided a key component of the first of Musk's ambitions by endorsing Tesla, along with scores of other domestic carmakers, as being compliant with China's data-security rules.
Elon Musk may have achieved a significant milestone tied to Tesla's FSD ambitions in China following a surprise weekend visit to Beijing.
Multiple media reports also suggest Tesla was able to cut a deal with tech giant Baidu (BIDU) , often referred to as the Google of China, to support some of the mapping and navigation functions of its FSD technologies.Honored to meet with Premier Li Qiang.We have known each other now for many years, since early Shanghai days. pic.twitter.com/JCnv6MbZ6W— Elon Musk (@elonmusk) April 28, 2024
The endorsement from the China auto association marks a significant milestone in Tesla's FSD efforts in China, where sales have fallen to multiyear lows amid intense competition from low-cost rivals and amid the broader EV demand slump.FSD approval is first step to autonomy Tesla, which has around 1.7 million of its cars on the road in China, launched its FSD software around four years ago but was forced to limit some of its functioning owing in part to the country's data-collection rules. However, Tesla likely also needs permission from Beijing to transfer data collected by its FSD software to its AI supercomputers in the U.S. in order to truly launch an autonomous driving option.Tesla's FSD technology does not render cars fully autonomous. The company urges drivers to keep their hands on the steering wheel, maintain strict attention to the road and be prepared to take corrective action as necessary.Related: Analysts scramble to reset Tesla price targets as stock soars after earningsMusk has long argued that Tesla is not just a carmaker but rather is a collective of tech-focused startups and sees these divisions as pivotal to his broader ambition of a creating a world packed with self-driving cars powered by his company's AI-led technologies.Morgan Stanley analyst Adam Jonas has said Tesla's DoJo supercomputer, which is powered by AI technologies, could add more than $500 million to Tesla's market value "through a faster adoption rate in mobility (robotaxis) and network services (software as a service)" over the coming years.More Tesla:Cathie Wood buys $22 million of battered tech stockAnalyst revises Tesla stock price target after robotaxi newsTop analyst reveals new Tesla price target ahead of Q1 earnings"If Musk is able to obtain approval from Beijing to transfer data collected in China abroad, this would be a 'game changer' around the acceleration of training its algorithms for its autonomous technology globally," said Wedbush analyst Dan Ives, who carries an outperform rating and a $275 price target on the stock. Related: Cathie Wood makes almost $100 million on battered tech stock"While demand challenges exist in China for Tesla, [Wall Street] is looking through this painful transition period for the long-term growth story to emerge for Musk & Co., with FSD a key ingredient in that recipe for success," he added.Tesla shares were marked 12.8% higher in early Monday trading to change hands at $189.77 each, the highest since early March. The stock, however, is still down more than 23.5% for the year.Related: Veteran fund manager picks favorite stocks for 2024
