One company that constantly finds its name in the spotlight is Tesla (NASDAQ: TSLA). The company’s CEO, entrepreneur Elon Musk, is equal parts entertaining and, at times, pretty jarring.
To be blunt, 2024 hasn’t been kind to Tesla shareholders. While most of the company’s “Magnificent Seven” peers have generated nice share price gains so far this year, Tesla shares are down about 23% as of this writing.
Nevertheless, after showing some signs of maturity and providing investors with thorough updates during the first-quarter earnings call last week, shares in Tesla rebounded slightly.
Over the weekend, news broke that Musk flew to China to meet with government officials — namely, Premier Li Qiang. Since the meeting on April 28, Tesla stock extended its post-earnings rebound by rocketing 14%.
Musk Explores Self-Driving Cars Focus
The last year has been brutal for Tesla. Unusually high inflation and rising interest rates weighed heavily on the economy and caused consumers to scale back spending. Considering Tesla’s electric vehicles (EV) are more of a luxury purchase, the company has struggled to sell more cars during these periods of prolonged economic challenges.
One of the ways that Tesla is trying to entice people to buy their cars over the competition is the company’s autonomous driving capabilities. Although Tesla’s Full Self Driving (FSD) technology appears to be making some notable progress, there is still a lot of work to be done before it’s commercialized at scale.
Image source: Getty Images.
Progress Made by Tesla
During Tesla’s first-quarter earnings, Musk was asked specifically about FSD in China. While Musk remained somewhat tightlipped, he did share that the plan for FSD is to release the technology “where we can get regulatory approval for that, which we think includes China.”
Following Musk’s discussion with regulators, Reuters reported that Tesla and Baidu have agreed to initial terms for the implementation of FSD in China.
By accessing Baidu’s mapping database, Tesla should make significant strides in its FSD platform — which it hopes to integrate into its vehicles in China.
Challenges Ahead
There are still some important security details about this deal that are not yet publicly known. For example, it is not entirely clear if Tesla or Baidu will be storing the driver data that is being collected to develop FSD in China.
Nevertheless, this development marks an important milestone for FSD and Tesla’s international growth, setting the stage for future differentiation in the market.
Should Tesla begin implementing FSD into its cars in China at scale, this would be a major differentiator over competing auto manufacturers and autonomous driving software developers.
Monitoring Tesla’s progress in autonomous driving technology relative to its peers will be crucial for investors considering future investments in the company.
Conclusion
While the recent developments in China are promising for Tesla, investors should exercise caution and consider the broader context of the company’s plans and progress in the autonomous driving space. The future remains uncertain, but Tesla’s focus on innovation and differentiation could position it favorably in the long run.