Analysts suggest that attention should be paid to the possibility of Tesla receiving approval for FSD (Full Self-Driving) sales in China by the end of this year.
China has historically imposed restrictions on foreign companies’ collection and transmission of road data. However, there are indications that these restrictions might be relaxed in 2024, which could pave the way for Tesla’s FSD approval.
Yeonju Park, a researcher at Mirae Asset Securities, said, “This shift likely stems from the growing importance of securing large amounts of real-world driving data, as China’s autonomous driving companies have significantly advanced their technology. If Tesla’s FSD sales are approved at this point, it could boost Chinese consumer interest in autonomous driving technology and expand the technological foundation, giving China the potential to lead the global market.”
For Tesla, gaining approval for FSD sales in China could finally unlock its long-anticipated software revenue. This approval might also indirectly stimulate growth in the autonomous driving market in developed countries, potentially boosting FSD license sales.
Recent advancements in AI are accelerating investment in China’s humanoid robotics industry, which is expected to drive global market growth, reduce costs, and expand the market overall.
Park noted, “While there are concerns about intensified competition with Chinese companies, Tesla’s technological superiority over its Chinese counterparts is firmly established. Therefore, the expanding market size will likely outweigh competition concerns.”
Tesla’s stock price continues to experience volatility due to weak electric vehicle sales in the second half of the year, a lack of short-term momentum, and high valuation. A Robo-taxi event is scheduled for early October. Still, such events typically outline a mid-to-long-term roadmap, and the immediate impact on stock prices is expected to be limited.
Park commented, “Tesla’s long-term corporate value hinges on AI-based autonomous driving and humanoid businesses. Especially if FSD sales in China are approved by year-end, the visibility of software revenues is expected to improve, boosting Tesla’s corporate value, and the development of the Chinese humanoid market will further highlight Tesla’s technological edge.”
Given the potential for long-term growth, the recommendation remains positive, with a buy rating and a target price of $264.
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