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Equities

Tesla Up 7% Premarket, Clears China FSD Hurdle with Baidu Boost

Tesla's stock climbs 7% after meeting China's data security standards, paving the way for Full Self-Driving rollout.

By Bill Bullington

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4/29, 05:30 EDT
Baidu, Inc.
Tesla, Inc.
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Key Takeaway

  • Tesla Inc. shares surged 7% in premarket trading after passing China's data security for FSD rollout, signaling strong market prospects.
  • Partnership with Baidu for mapping and navigation boosts Tesla's FSD capabilities in China; Baidu shares also rose by 2.4%.
  • Amidst competition and declining sales in China, the FSD approval positions Tesla to regain market share and boost future revenue.

Tesla's Shares Surge on China Milestone

Shares of Tesla Inc. experienced a notable increase in U.S. premarket trading, climbing 7% early Monday. This surge followed the electric vehicle giant's announcement of passing China's data security requirements, a significant step towards rolling out its Full Self-Driving (FSD) technology in the world's largest electric vehicle market. Tesla's CEO, Elon Musk, recently visited China, which culminated in the lifting of restrictions on Tesla cars by local Chinese authorities. This development has heightened expectations for the availability of Tesla's driver-assistance software, FSD, in China.

Strategic Partnerships and Regulatory Approvals

During Elon Musk's visit to China, Tesla Inc. cleared crucial hurdles for introducing its FSD technology in the Chinese market. The company announced a partnership with Baidu Inc., a leading Chinese tech giant, to utilize its mapping and navigation functions essential for FSD. This collaboration is pivotal as Baidu holds top-level mapping credentials in China, crucial for driver-assistance functions. Furthermore, Tesla has successfully met a key data-security and privacy requirement, easing concerns about FSD's introduction in China. These developments have not only boosted Tesla's shares but also Baidu's, which saw a 2.4% increase in Hong Kong.

Tesla's Market Position and Future Prospects

Tesla's advancements in China come at a critical time for the company, which has seen its market share in China decrease amidst stiff competition from domestic EV manufacturers like BYD Co. The approval of FSD in China represents a significant opportunity for Tesla to regain lost ground and boost its revenue, which had declined year-over-year for the first time since 2020. Despite price cuts, Tesla's vehicle sales in China had dropped in the first quarter. Elon Musk has announced plans to cut headcount by at least 10% and accelerate the development of new, less-expensive models that could be ready as early as 2025.