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Tesla’s stock price rose after Chief Executive Officer Elon Musk reached an agreement with Chinese search and mapping group Baidu, paving the way for the US company’s semi-autonomous driving technology to be rolled out in the world’s largest car market. The price soared as a result.
The partnership comes after Musk met with China’s No. 2 leader, Premier Li Qiang, in Beijing on Sunday. US automakers have recently had to contend with declining sales and data security concerns.
Tesla shares rose 17% to $197 on Monday, giving the company a market value of $615.8 billion. It has halved in the past two years, but has risen by more than a third in the past week.
Tesla has cleared an important regulatory hurdle with the Baidu partnership. Foreign companies selling smart vehicles in China must use one of about 20 licensed domestic suppliers of mapping and navigation systems, according to people familiar with the matter.
Tesla held about 7.5% of China’s EV market in the first quarter, making the country its second-largest market.
However, Mr. Musk is pushing Tesla’s “fully self-driving” system into the country to boost profitability for the automaker, which is suffering from declining sales due to intensifying competition. Although the system can accelerate, steer, and brake, it is not strictly a fully autonomous technology.
Tesla’s stock price has fallen about 30% this year, underperforming rivals in China. The company has also been hit by a slowdown in global EV sales and has cut thousands of jobs. Tesla did not respond to a request for comment.
Earlier this year, Tesla lowered the monthly subscription price for its fully self-driving system in the United States. Musk has also talked about licensing his system to other automakers.
“Going up against the wall when it comes to autonomy is a clear and obvious move,” Musk wrote on his social media platform X earlier this month.
Deploying this technology in China would not only dramatically increase subscription revenue but also differentiate it from the growing number of competitive electric vehicles from local manufacturers.
Access to high-resolution mapping is essential for the functioning of even partially autonomous driving technology systems. Autonomous systems rely on maps of the existing road network as well as a combination of sensors such as cameras and radar that can recognize obstacles for navigation.
To maneuver safely, a vehicle must know precisely its location, often to within a millimeter, as well as the contours of the terrain around it.
On Sunday, Tesla’s electric vehicles were included in a list of more than 70 vehicle models tested for data security compliance by a Chinese industry group.
But Tom Nunlist, a China technology regulation expert at Beijing-based consulting firm Trivium, said the industry body’s suitability test falls short of Tesla’s approval.
“It’s not a certification. It’s not an endorsement. It’s just an assessment. The industry group is looking into whether these companies are voluntarily complying with the new set of requirements,” he said. Ta.
The Chinese government also requires sellers of vehicles equipped with self-driving technology to store user data in China that is needed to improve their systems, which are primarily developed in the United States.
Musk said in 2021 that Tesla established a data center in China to localize “all data generated from our business in China, including production, sales, service, and charging.”
