Tesla shares surge after China's 'tentative approval' of new driving software

30 April 2024 , 10:05

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A Model X sports-utility vehicle sits outside a Tesla store in Littleton, Colo. Shares of Tesla stock rallied this week after Elon Musk paid a surprise visit to Beijing and reportedly won tentative approval for its driving software (Image: Copyright 2023 The Associated Press. All rights reserved.)

Tesla's shares have soared following reports that the Chinese government has given preliminary approval for the company's driving software.

The electric vehicle manufacturer's chief executive Elon Musk, made an unexpected trip to Beijing over the weekend, coinciding with the city's auto show where local carmakers are showcasing their latest electric models. According to The Wall Street Journal, citing unnamed sources, Chinese officials have tentatively greenlit Tesla's plan to introduce its "Full Self-Driving," (FSD) feature in the country. Despite its name, FSD still requires human oversight.

This comes as the US government's auto safety agency is investigating whether a recall of Tesla's Autopilot system last year was sufficient in ensuring drivers remain attentive on the road. Since the recall, Tesla has reported 20 additional Autopilot-related accidents, according to the National Highway Traffic Safety Administration.

In Monday's afternoon trading, Tesla Inc. , headquartered in Austin, Texas, saw its shares surge by over 15% - marking its largest single-day increase since February 2020. However, the company's shares are still down 22% for the year so far.

Tesla, grappling with a declining share price and production hiccups, recently announced a significant dip in first-quarter net income, which halved. However, the electric car giant is pinning hopes on a new, more affordable model and a fully self-driving robotaxi to drive future expansion.

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Dan Ives, an analyst at Wedbush, hailed the Chinese green light as a "home run" for Tesla, reaffirming his bullish "Outperform" stance on the company's shares. Mr Ives highlighted in a client note: "We note Tesla has stored all data collected by its Chinese fleet in Shanghai since 2021 as required by regulators in Beijing."

He added, "If Musk is able to obtain approval from Beijing to transfer data collected in China abroad this would be pivotal around the acceleration of training its algorithms for its autonomous technology globally."

Lawrence Matheson