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Tesla shares rose after full approval of self-driving in China

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Tesla ( TSLA ) shares rose on Monday following reports that CEO Elon Musk has received Chinese approval to deploy the automaker's Full Self-Driving (FSD) software on the mainland.

As reported for the first time Wall Street JournalOfficials told Tesla they had tentatively approved FSD in the country during Musk's 24-hour visit to Beijing over the weekend, people familiar with the matter said.

separately, Bloomberg It was previously reported that Tesla will use Chinese tech company Baidu's street-level mapping data to power the FSD. Tesla previously used Baidu Maps data for satellite navigation in its cars. Reports said that working with a Chinese company helped obtain regulatory approval as data privacy and security risks were reduced.

Tesla shares closed up 15.3%, recording its highest levels since March 1. Tesla stock has now risen more than 30% in the past four trading sessions.

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

The addition of FSD functionality in China is big for the automaker, not only in terms of the additional revenue added, but also in terms of the competitive advantage it gives Tesla against rivals like NIO, Li Auto, XPeng, and even tech giants like Xiaomi, which is entry into The car market has its own semi-autonomous software.

“What Tesla has to do is stay at the forefront of innovation. It has to be the most technologically advanced solution,” China expert Leland Miller of China Beige Book told Yahoo Finance. “We have a saturated domestic market, and an ongoing price war,” he added. . [Tesla] “It needs to stay on top of the technology ladder.”

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Tesla's lack of FSD in its cars has likely affected sales in China, where it has been reported Technical features are prioritized. Per China Passenger Car AssociationTesla's Chinese market share fell to 6.7% in the fourth quarter of 2023 from 10.5% the previous year despite significant price cuts. Globally, Tesla deliveries in the first quarter fell to 387,000 units from 423,000 last year.

However, getting preliminary approval for FSD and a 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 Qiang in Beijing, Sunday, April 28, 2024. Musk met with a senior government leader in the Chinese capital on Sunday, just as The country's automakers are showcasing their latest electric vehicle models at the Beijing Auto Show.  (Wang Yi/Xinhua via AP)

Tesla CEO Elon Musk, left, meets with Chinese Premier Li Qiang in Beijing, Sunday, April 28, 2024. (Wang Yi/Xinhua via AP) (News agency)

“Musk winning FSD approval in the key Chinese market is a watershed moment for the Tesla story in our view,” Wedbush analyst Dan Ives said in a note to investors, also claiming it was a “home run” for Musk. “While Tesla's long-term valuation story hinges on FSD and autonomous driving, the key missing piece to this puzzle is that Tesla is making FSD available in China and it's now a done deal.”

Tesla's focus on autonomous driving and even the future of robotaxis are long-term catalysts for the company, which has seen its shareholder class shift and transform. Trade much less In the last two weeks alone.

A key part of developing Tesla's autonomous AI software is collecting massive amounts of data to feed into its software model. Ive noted that Tesla has had to store its data in China since 2021 in accordance with regulatory requirements.

Ives said that Tesla getting more approval to migrate that data in China to its servers in the United States will speed up “the training of its algorithms on autonomous technology globally.” Furthermore, FSD users in China may be more inclined to subscribe to the service and use it more frequently because of this The government encouraged self-driving in various regionsThus providing more data for Tesla to improve its FSD software.

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Pras Subramanian is a reporter for Yahoo Finance. You can follow it Twitter and on Instagram.

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