MW Tesla clears China data security rules, to partner with Baidu over self-driving tech: report
By Barbara Kollmeyer
Elon Musk's surprise trip to China appears to have yielded results, with Tesla reportedly passing a crucial regulatory bar for its new driver assistance technology, and partnering with one of the country's biggest tech names.
Tesla $(TSLA)$ is teaming up with Baidu $(BIDU)$ for mapping and navigation on Full-Self Driving assistance for drivers, Bloomberg reported on Monday, citing sources. MarketWatch has reached out to Baidu for comment.
That came as Musk made an unannounced visit to China over the weekend, meeting with several officials, including Premier Li Qiang:
The meetings were aimed at getting Tesla's Full-Self Driving $(FSD)$ software rolled out to Chinese drivers and permission for transferring data overseas, Wedbush analyst Dan Ives wrote in a Sunday report. Tesla needs all FSD features unlocked to fully open its new driver assistance technology opened for Chinese owners.
Bloomberg and other media outlets reported Monday that Tesla vehicles, reportedly barred from military and other government sites due to data collection concerns, have now been cleared by the Chinese government over data security and privacy.
According to ChinaDaily.com, the China Association of Automobile Manufacturers (CAAM) released a list of 76 models of intelligent connected cars that meet standards for the country's data security requirements for automobiles, with Tesla and rival BYD (CN:002594) both on those lists.
The approval came after security tests conducted by CAAM and National Computer Network Emergency Response Technical Team/Coordination Center of China.
MarketWatch has reached out to Tesla and the CAAM for comment.
"While the long term valuation story at Tesla hinges on FSD and autonomous, a key missing piece in that puzzle is Tesla making FSD available in China which now appears on the doorstep," said Ives.
Tesla reported a disappointing first quarter last week, with a sharp decline in profit, but shares jumped as investors focused on Musk's promises to deliver a "more affordable vehicle."
Overall weaker sentiment regarding EVs and Tesla's own particular struggles, which have forced the company to cut its head count, have weighed on shares this year. Down 32% year-to-date, shares rallied 14% last week.
In a note to clients that published Sunday, Evercore analysts led by Chris McNally, lowered their Tesla price target to $145 from $155 per share, keeping an in-line rating. They cited the EV maker's struggles to meet its selling goals, which may only mean more price cuts - "lose-lose given near zero elasticity," as well as issues with a cheaper auto, which still may not be low-cost enough to compete in China.
That stiff China competition for Tesla includes BYD, which offers a subcompact EV that starts at less than $10,000.
"Tesla is a clear story of three regions," said McNally and his team. That is dominant in the U.S. with just under 50% share of neighborhood electric vehicles $(NEV)$, 11% to 12% share in Europe and just 5% to 6% in China.
"China remains the driving force behind global NEV volumes at 60-65% of total," said the analysts.
Opinion: Elon Musk gives Wall Street what it wants, but more pain could be around the corner
-Barbara Kollmeyer
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April 29, 2024 03:15 ET (07:15 GMT)
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