Musk Courts Chinese Officials as Tesla Pushes for Full Self-Driving Approval

“Musk made a surprise weekend trip to Beijing to meet with a host of high-ranking Chinese government officials, including Chinese Premier Li Qiang, with a laser focus on cutting the ribbon on the long-awaited rollout of FSD software and permission/approval to transfer data overseas,” wrote Wedbush analyst Dan Ives in a Sunday report.

FSD is short for Full Self-Driving, Tesla’s highest-level driver assistance product that Musk believes will turn Teslas into truly self-driving cars today. For now, FSD requires driver supervision 100% of the time.

Musk has long believed that achieving autonomous driving represents a huge financial windfall for the company. It’s been harder to achieve than anyone expected—the original DARPA self-driving challenge was 20 years ago—but Tesla has scheduled a robotaxi reveal event on Aug. 8. The company appears to believe it’s making significant progress.

Before self-driving cars can be unlocked. Tesla needs to be allowed to unlock all its FSD features for Chinese Tesla owners. Tesla sells driver assistance technology, but the Chinese version of FSD doesn’t have all the features available in North America, such as stopping at traffic lights and stop signs.

“While the long-term valuation story at Tesla hinges on FSD and autonomous, a key missing piece in that puzzle is Tesla making FSD available in China which now appears on the doorstep,” added Ives. “This is a watershed moment for Musk as well as Beijing at a time that Tesla has faced massive domestic EV competition in China along with softer demand.”

Better driver assistance software can help demand for any vehicle. Tesla also uses data collected from driver experience to improve its FSD product using artificial intelligence-based computing.

Whether Tesla stock will get a boost from Musk’s visit is anyone’s guess. Shares had an incredible week this past week, gaining 14.4%

Better-than-feared first-quarter earnings as well as a revelation that Tesla would accelerate the development of a lower-priced vehicle boosted investor sentiment.

Investors needed a boost, Coming into Monday, Tesla shares are off about 32% so far this year, underperforming the

Nasdaq Composite

by some 38 percentage points. Slowing growth has weighed on investors’ minds. Tesla delivered about 387,000 units in the first quarter, down almost 9% from the same time a year ago.

Ives rates Tesla share Buy and has a $275 price target for the stock. Overall, 41% of analysts covering Tesla stock rate shares Buy, according to FactSet. The average Buy-rating ratio for stocks in the

S&P 500

is about 55%. The average analyst price target for Tesla shares is about $184 apiece.

Write to Liz Moyer at liz.moyer@barrons.com