Tesla stock soars on China deal rumors
Elon Musk has reportedly joined with Chinese internet giant Baidu to develop autonomous driving technology.
Shares in Tesla have surged following reports that CEO Elon Musk has agreed to partner with Chinese tech giant Baidu for mapping and navigation features to support autonomous driving technology in the world’s biggest auto market.
Shares rose nearly 14% in premarket US trading, while Baidu jumped by more than 5.5% in Hong Kong.
Baidu, China’s main internet search company, has agreed to provide the US electric vehicle (EV) maker with access to its mapping license for data collection on China’s public roads, Reuters reported on Monday morning, citing people familiar with the matter.
The sources highlighted that the agreement clears final regulatory obstacles for the rollout of Tesla’s Full Self Driving (FSD), the latest version of its Autopilot technology.
On Sunday, the US billionaire visited China, where he held talks with Prime Minister Li Qiang. Media reports suggested that Musk was seeking approval for the FSD software rollout in China, as well as permission to transfer data overseas during the talks.
Chinese officials have given tentative approval for the rollout of Tesla’s driver-assistance service in the country, the Wall Street Journal reported, citing sources. The company also managed to meet requirements for how it handles data security and privacy issues, people familiar with the matter told Bloomberg.
Under Chinese law, automakers need to obtain a mapping qualification to start operating autonomous driving systems on public roads. Foreign enterprises must cooperate with local tech firms to get a license. The deal with Baidu is expected to allow the US company to legally operate the software in China, while its cars would be able to collect data about surroundings, including road layouts, traffic signs, and nearby buildings.
Tesla rolled out its FSD four years ago, but the technology hasn’t been available in China due to regulatory hurdles. Earlier this month, in response to a query on X (formerly Twitter), Musk said the feature would appear in the country “very soon.”
The approval for the technology in China is expected to significantly improve Tesla’s balance sheet. The company recently recorded its first year-on-year decline in quarterly revenue since 2020, showing a 9% drop for sales. Earlier this month, the automaker said it was cutting more than 10% of its global staff as part of a plan for “cost reductions and increasing productivity.”
Musk’s surprise visit to China was “a watershed moment,” Wedbush Securities senior analyst Dan Ives told Bloomberg, adding that it could “open up FSD in China, unlocking what really could be the golden opportunity for them.”
https://www.rt.com/business/596758-tesla-shares-china-autopilot-musk/