Tesla’s Shares Surge as Partnership with Baidu Clears Regulatory Hurdle in China

(CTN News) – Tesla’s stock surged following reports that the company has overcome a significant regulatory hurdle in China through a partnership with search engine giant Baidu.

These reports emerged after CEO Elon Musk made an unexpected visit to meet with China’s second-ranking official, Premier Li Qiang.

The collaboration with Baidu brings Tesla closer to implementing its self-driving technology in China, a milestone described by Wedbush analyst Daniel Ives as “a watershed moment.”

Tesla and Baidu have been approached for comments, with Baidu declining to provide a statement.

Ives acknowledged that Tesla faces intense competition in the Chinese electric vehicle market amid softer demand. However, he emphasized that the company’s long-term valuation hinges on gaining approval for fully autonomous driving.

The reported agreement with Baidu would enable Tesla to deploy certain autonomous driving features in China. Leveraging Baidu’s mapping and navigation services, Tesla can enhance its self-driving capabilities, including assisted parking.

Challenges and Progress in Tesla’s Pursuit of Autonomous Driving

However, achieving full autonomous technology would still necessitate additional approvals.

While TSLA is a leading electric car manufacturer globally, China represents its second-largest market. Despite its success elsewhere, Tesla has yet to introduce autonomous driving in China, a market where Mr. Musk sees immense potential for such technology.

Mr. Musk has consistently advocated for the future of autonomous driving, expressing strong confidence in Tesla’s ability to pioneer this revolution. He previously stated, “If somebody doesn’t believe Tesla is going to solve autonomy, I think they should not be an investor.”

However, even in the United States, where TSLA has rolled out its autopilot feature, autonomous cars face obstacles and regulatory scrutiny. Tesla’s autopilot system enables drivers to delegate control to the vehicle’s AI but still requires continuous human supervision.

Despite safety precautions, there have been fatal incidents attributed to misuse of Tesla’s autopilot technology. In response, the US auto regulator recently launched an investigation into the effectiveness of a software update aimed at addressing autopilot issues.

The agency highlighted the role of driver misuse in numerous Tesla accidents, including fatalities and serious injuries.

In December, a former Tesla employee raised concerns about the safety of the technology powering Tesla’s self-driving vehicles, expressing skepticism about its readiness for public roads.

Tesla’s Stock Soars

TSLA’s stock surged nearly 12% at the opening of the US markets on Monday, marking a recovery in its value after experiencing a decline of over a quarter since January.

The reported Chinese regulatory approval, although not officially confirmed by Tesla or Baidu, was widely covered by media outlets such as AP, Reuters, Bloomberg, and the Financial Times.

This development followed Elon Musk’s visit to China over the weekend, where he engaged with senior officials.

State media quoted Musk expressing Tesla’s desire for cooperation with China to achieve mutually beneficial outcomes, stating a goal of “more win-win results.”

Analysts view this approval as crucial for Tesla, particularly as the company’s financial performance has faltered.

In its recent quarterly results, Tesla reported $21.3 billion in sales for the first quarter of the year, a decrease from $23.3 billion in the same period last year and slightly below analysts’ expectations of just over $22 billion.

The decline in sales was attributed to increased competition and changes in government incentives for electric vehicles. While revenue from the US decreased from $11.2 billion to $9.76 billion, Chinese sales exhibited better resilience, dropping from $4.89 billion to $4.59 billion.

SEE ALSO: Elon Musk To Discuss Enabling Full Self Driving (FSD) Mode On Tesla Cars In China