Over the weekend, Tesla CEO Elon Musk announced that Tesla’s advanced driver-assistance system, Full Self Driving (FSD), has been cleared for sale in China, prompting a 15% surge in Tesla’s stock on Monday.
This move marks a significant expansion for Tesla into the Chinese market, which is already a major hub for electric vehicle (EV) production and adoption.
Picture: Tesla shares on the rise as seen as VT Markets app.
Investors and analysts are now tasked with evaluating both the benefits and challenges this development presents for Tesla. One of the key concerns involves data privacy and the localisation of the AI technology used in FSD.
Due to regulatory restrictions, Nvidia chips, which power some of Tesla’s training computers, are not available for sale in China. This requires Tesla to adapt its approach, particularly in how it handles and processes Chinese driver data.
Financially, the potential revenue from FSD sales in China could be significant, albeit not transformative in the short term. If 25% of Tesla’s 1.7 million Chinese vehicle owners subscribe to FSD at the U.S. rate of $99 per month, this would generate approximately $500 million in annual revenue, translating into an increase of about 10 cents in earnings per share, assuming a 100% profit margin.
RELATED: Tesla’s Recent Market Report on 24 April 2024
However, the long-term financial implications could be more substantial if Tesla successfully transitions from selling FSD subscriptions to launching a robotaxi service. This shift would represent a more considerable upside potential for earnings, as autonomous driving technology matures to a point where vehicles can operate without human intervention.
As Tesla navigates these new opportunities and challenges in China, the broader market and Tesla investors will closely monitor the adaptation of its technology in compliance with local laws and its impact on Tesla’s growth trajectory in the EV market.
For those looking to stay updated on Tesla‘s progress with FSD in China and other market-moving news, consider a tool that offers real-time financial data and analytics. Download the VT Markets app and open your CFD account here to access a platform that helps you keep pace with the fast-moving market dynamics and leverage opportunities as they arise.
Start trading today. Click here to open a live account.
