Tesla’s stock leaps on reports of Chinese approval for the company’s driving software

By James On Apr 29, 2024

NEW YORK — Shares of Tesla rose on Monday after the electric vehicle maker’s CEO Elon Musk made a surprise visit to Beijing this weekend and reportedly received preliminary approval for its driving software.

Musk met with a senior government official in the Chinese capital on Sunday, just as the country’s automakers showed off their latest electric vehicle models at the Beijing auto show.

According to The Wall Street Journal, which cited unnamed sources familiar with the matter, Chinese officials told Tesla that Beijing has tentatively approved the automaker’s plan to launch its “Full Self-Driving” or FSD software feature in the country .

Although it’s called FSD, the software still requires human supervision. On Friday, the US government’s auto safety agency said it is investigating whether last year’s recall of Tesla’s Autopilot driving system did enough to ensure drivers paid attention to the road. According to the National Highway Traffic Safety Administration, Tesla has reported another 20 accidents involving Autopilot since the recall.

In afternoon trading, shares of Austin, Texas-based Tesla Inc. rose nearly 15% — the biggest one-day jump since February 2020. Year to date, shares are still down 22%.

Tesla is struggling with a decline in stock prices and slowing production. Last week the company said first-quarter net profit fell by more than half, but it touted a newer, cheaper car and a fully autonomous robotaxi as a catalyst for future growth.

Wedbush analyst Dan Ives called news of the Chinese approval a “home run” for Tesla and maintained his “Outperform” rating on the stock.

“We note that Tesla has stored all data collected by its Chinese fleet in Shanghai since 2021, as required by Beijing regulators,” Ives wrote in a note to investors. “If Musk can get permission from Beijing to transfer data collected in China abroad, it would be critical to accelerating the global training of his algorithms for his autonomous technology.”