NEW YORK — In a surprising turn of events, Tesla’s stock experienced a significant uplift following CEO Elon Musk’s unexpected trip to Beijing. During this visit, Musk reportedly secured preliminary approval for the company’s advanced driving software, sending shares soaring.
The Tesla CEO’s meeting occurred amidst the Beijing auto show, where China’s latest electric vehicles were being unveiled. Sources hinted to The Wall Street Journal that Chinese authorities granted tentative approval for Tesla’s “Full Self-Driving” (FSD) software, a development that could greatly benefit the company.
Safety and Financial Challenges Confront Tesla
Despite its name, the FSD software still demands driver supervision. This software’s safety has been under scrutiny, especially after the U.S. auto safety body questioned the adequacy of a recent recall of Tesla’s Autopilot system in ensuring driver engagement. According to the National Highway Traffic Safety Administration, there have been additional incidents involving Autopilot following the recall.
By Monday afternoon, Tesla shares had jumped over 15%, marking the largest single-day rise since February 2020, even though the year-to-date figures show a 22% drop in share value. Amidst a decline in first-quarter net income and other production challenges, Tesla has promoted upcoming projects, including a more affordable car model and a fully autonomous robotaxi, as potential growth drivers.
Dan Ives, an analyst from Wedbush, described the approvals in China as a significant win for Tesla, maintaining an “Outperform” rating on the stock. Ives noted the strategic data handling by Tesla in Shanghai since 2021, adhering to local regulations, and emphasized the potential global impact if Musk could negotiate terms to transfer Chinese data abroad to further enhance Tesla’s autonomous technology algorithms.
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