Tesla shares jumped in premarket trading in New York after Bloomberg reported that Beijing had given Tesla the 'greenlight' to roll out its driver-assistance system, known as "Full Self-Driving," or FSD, in the world's largest car market.
Sources say Tesla will partner with Chinese tech giant Baidu for mapping and navigation software to support FSD. Tesla also has multiple data security and privacy requirements that satisfy the country's regulators.
In a separate report, The Wall Street Journal said, "Beijing has tentatively approved the company's plan to launch FSD."
The approval comes one day after Elon Musk unexpectedly visited Beijing on Sunday and met with Premier Li Qiang, who was previously the Communist Party chief in Shanghai when Tesla was setting up its automobile manufacturing plant there.
WSJ said Musk also met with Robin Zeng, chairman of Tesla battery supplier Contemporary Amperex Technology, in Beijing.
Wedbush Securities senior analyst Dan Ives told Bloomberg TV that Musk's weekend visit to China was a major "watershed moment."
"This could open up FSD in China, which I view as unlocking what really could be the golden opportunity for them," Ives said.
FSD approval in China would be a massive win for Tesla, given the company's year-over-year decline in quarterly revenue since 2020. The worsening EV price war with other EV makers and legacy automakers, in addition to high interest rates curbing demand, has forced the company to reduce its global headcount by 10%.
News of China's backing of FSD sent Tesla shares up 8% in premarket trading in New York.
As of Friday's close, shares are down 32% this year, while 3.84% of the float is short, equivalent to about 106 million shares. Short interest has hit a three year high.
On an earnings call last week, Musk said, "We plan on, with the approval of the regulators, releasing it as a supervised autonomy system in any market that — where we can get regulatory approval for that, which we think includes China."
