Tesla (NASDAQ:TSLA) stock rose 12% over the weekend after CEO Elon Musk secured approval for its Full Self-Driving (FSD) efforts in China.
The feature will be based on mapping services from Chinese search giant Baidu (NASDAQ:BIDU). Baidu already offers its own self-driving car.
TSLA stock was due to open this morning at $190 per share, bringing its market capitalization back to over $600 billion. However, the shares are still down 22% this year. Half the shares held off listed exchanges are now being sold short.
Self-Driving Aware
During a weekend trip, Musk met directly with top Chinese officials, including Premier Li Qiang. Tesla bull Dan Ives of Wedbush called the trip a “home run.”
The China visit halted the negative momentum surrounding Tesla and Musk. Tesla recently slashed its payroll by 10% amid lower earnings, and Musk also axed plans for a sub-$25,000 car.
Tesla still faces increasing pressure in China, where a host of smaller electric vehicle (EV) companies are beating it on price. Some, like BYD (OTCMKTS:BYDDF), are even beating Tesla’s margins with cars costing as little as $11,000, thanks to vertical integration.
Rather than compete on price, Musk hopes to meet the challenge with artificial intelligence (AI) features like self-driving. Musk said Tesla will invest $10 billion in AI software this year and introduce its Robotaxi on August 11.
During his trip, Musk met with Robin Zheng, who runs Tesla’s main battery supplier, CATL. CATL is in talks with Tesla and other battery makers to license its technology.
Tesla remains highly controversial. While Tesla bulls are defending the company today, Asana (NASDAQ:ASAN) founder Dustin Moskowitz recently compared the company to Enron. The National Highway Traffic Safety Administration (NHTSA) has blamed Tesla’s Autopilot software for 467 accidents, including 13 deaths. The agency is looking at new software introduced in December as part of a recall.
TSLA Stock: What Happens Next?
TSLA remains a battlefield stock, with Musk the most controversial figure in American business. Wall Street remains anxious about whether Musk can deliver on his latest promises.
On the date of publication, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
