Shares of
Tesla surged sharply in U.S. premarket trading on Monday following the electric carmaker's achievement of a significant milestone to introduce its complete autonomous driving technology in China.
The company's stock price skyrocketed by over 12% around 8:30 a.m. ET, in response to developments surrounding Tesla CEO Elon Musk's visit to China.
Tesla announced on Sunday that local Chinese authorities lifted restrictions on its vehicles after meeting the country's data security standards.
This action heightened anticipation for the availability of Tesla's Full Self-Driving (FSD) driver-assistance software in China, the largest market for electric vehicles.
While Tesla's electric cars enjoy immense popularity in China, they have purportedly faced bans from certain government-related premises due to concerns over data security.
Additionally, earlier this year, the Biden administration initiated an investigation into whether imported Chinese cars pose national security threats due to their potential to gather sensitive data.
FSD represents an upgrade to Tesla's Autopilot driver-assistance system. While Tesla has offered its FSD technology in China for some time, it has been limited to certain functionalities such as automated lane changes.
Concerns over data security have posed a significant hurdle for Tesla in fully deploying its system in China.
Tesla reportedly struck a deal with Baidu, granting Musk's company access to the Chinese internet giant's mapping and navigation technology for Tesla's FSD feature.
This agreement would enable Tesla to leverage Baidu's mapping service license, a prerequisite for intelligent driving systems to operate on public roads in China, according to Reuters, citing two anonymous sources familiar with the matter.
CNBC could not independently verify the report, and Tesla and Baidu were not immediately available for comment.
With this license, which foreign firms can only obtain through partnerships with local Chinese companies, Tesla will be permitted to legally deploy FSD on Chinese roads, allowing its fleets to collect data on traffic, road signage, and routes.
Tesla's progress towards introducing its FSD technology in China represents a significant victory for the company, particularly amidst stiff competition in the Chinese market. Local rivals like Warren Buffett-backed electric vehicle manufacturer BYD, Nio, and XPeng have intensified their competition with Tesla in recent years.
BYD briefly held the title of the world's largest electric vehicle manufacturer, producing over three million new energy vehicles in 2023. However, it recently relinquished this title following a 43% decline in sales in the first quarter.
