Tesla Shares Rise 15% on Anticipation of China's 'FSD' Launch

U.S. electric vehicle company Tesla's stock surged more than 15% on news that it has laid the groundwork for the launch of its Full Self-Driving (FSD) software in China.

[Image source=AFP Yonhap News]

On Monday, the 29th (local time), Tesla's stock closed at $194.05 per share on the New York Stock Exchange, up 15.31% from the previous session. During the day, it rose more than 17% to reach $198.87. This is the highest level in about two months since March 1st (closing price $202.64). Market capitalization also increased by about $100 billion in a single day.

The surge in Tesla's stock price on this day is attributed to CEO Elon Musk's last-minute visit to China over the weekend, postponing his trip to India, where he reportedly received a bundle of gifts including provisional approval for FSD and a contract with Baidu.

CEO Musk met with Li Qiang, China's second-in-command and Premier of the State Council, the day before. Shortly after, the China Association of Automobile Manufacturers announced that Tesla, BYD, and others had passed the automobile data security inspection. This is seen as a green light for Tesla's local FSD launch in China. While Tesla offers FSD services in the U.S. and several other countries, it had not been able to launch in China due to regulatory restrictions.

On the same day, foreign media reported that Tesla agreed to cooperate with Chinese portal company Baidu in mapping and navigation. Bloomberg News stated, "Tesla has removed the two most important obstacles for the FSD launch," explaining that Tesla signed a cooperation agreement with Baidu for mapping and navigation and met the authorities' requirements for handling data security and privacy issues. In China, qualification for mapping is essential for intelligent driving systems to operate on public roads. Additionally, foreign companies must partner with licensed Chinese companies like Baidu to obtain the necessary licenses.

Dan Ives, senior analyst at Wedbush Securities, called CEO Musk's sudden visit to China a "significant turning point" in an interview with Bloomberg TV, adding that "this could be a golden opportunity to introduce FSD in China." FSD is software that elevates the driving assistance feature Autopilot to the next level and is sold separately from the Autopilot system, which comes standard on Tesla vehicles. Bloomberg reported, "Approval of FSD in China will be a major boost for Tesla, which has seen quarterly revenue declines since 2020."

Meanwhile, the three major indices on the New York Stock Exchange closed slightly higher, supported by the Tesla effect and strong corporate earnings. The tech-heavy Nasdaq index rose 0.35% from the previous session.