Tesla Shares Soar on Reports of China Deal
Tesla’s shares have experienced a significant surge following reports that the company has successfully navigated an important regulatory obstacle in China through a partnership with search engine giant Baidu. The news comes in the wake of CEO Elon Musk’s unexpected visit to meet with Premier Li Qiang, China’s second-ranking leader. This collaboration with Baidu brings Musk one step closer to introducing Tesla’s self-driving technology in China.
According to Wedbush analyst Daniel Ives, this development is seen as a “watershed moment” for the company. However, Tesla still faces substantial competition in the Chinese electric vehicle market and softer demand. The long-term valuation of the company hinges on obtaining approval for fully autonomous driving. While the current approval allows Tesla to sell certain autonomous driving components in China, such as assisted parking, full approval for autonomous technology still awaits.
The surge in Tesla’s share price, which rose by nearly 12% upon the opening of the US markets, signals a recovery of some of the value lost since the beginning of the year. The stock had experienced a decline of over a quarter since January. Analysts believe that obtaining approval in China is crucial for Tesla, as its performance in other markets has weakened. In its latest quarterly results, the company’s profits more than halved during the first three months of the year.
