Kink in Tesla FSD Armor China

Elon Musk's China visit leads to Tesla's FSD approval, sparking stock surge. Analysts skeptical about FSD uptake potential. Tesla shares rise.

Elon Musk has seemingly outmaneuvered Tesla's critics by securing approval for the Full Self-Driving (FSD) service in China, the largest market for electric vehicles. This move, following a successful meeting with Premier Li Qiang, has sparked optimism among Tesla bulls. The recent agreement with Baidu for mapping data access and the passing of safety tests for China-built Model 3 and Model Y units have further fueled this optimism.

However, while investors are pricing in significant gains from the FSD rollout, some analysts caution against overly optimistic projections. JL Warren Capital's Junheng Li points out that the limited daily commute times of Tesla owners in China may hinder widespread adoption of the FSD. Additionally, concerns about the efficacy of Tesla's autonomous driving system remain, as evidenced by ongoing Autopilot lawsuits.

Despite these challenges, Tesla's stock has seen a significant uptick in recent days, with a 35 percent increase since the earnings report. While initial gains were attributed to relief rally following Musk's announcement of the cheaper Model 2, the current surge is largely driven by FSD-related excitement. It remains to be seen how Tesla's FSD rollout in China will ultimately impact the company's performance and investor sentiment.