Tesla, Inc. TSLA CEO Elon Musk made a surprising visit to China on Sunday and met with the country’s premier Li Qiang, according to Bloomberg. A bullish analyst said the visit could be related to the rollout of full-self driving in the country.
What Happened: Immediately after Musk landed in China, the billionaire met with Li, who told him that China is always open to foreign companies and that Tesla was a successful example of Sino-U.S. trade cooperation, Bloomberg reported, citing China Central Television.
The Tesla chief arrived in China at a Gulfstream registered to SpaceX at 2 p.m. local time, the report said.
Musk reportedly told the premier that Tesla was willing to deepen its cooperation with China. Musk also met with other high-ranking officials, including Ren Hongbin, head of the China Council for the Promotion of International Trade, the report said.
The Tesla CEO is also expected to meet with officials to discuss the rollout of Tesla’s driver-assistance system, Bloomberg reported, citing a person familiar with the matter.
See Also: Everything You Need To Know About Tesla Stock
Why It’s Important: As Tesla’s core electric-vehicle business stutters amid amid slowing adoption precipitated by economic uncertainty, the company is resting its hopes on recurring high-margin revenue from the adoption of its FSD software suite. The FSD project has moved from beta testing and is now being promoted as FSD Supervised in North America.
Musk said on Tesla’s first-quarter earnings call that he was looking to release the FSD in other markets.
“We plan on, with the approval of the regulators, releasing it as a supervised autonomy system in any market that — where we can get regulatory approval for that, which we think includes China,” he said.
With local EV players such as XPeng and Huawei promoting their sophisticated advanced driver-assistance systems as a selling point, Tesla’s rollout of its FSD in China could give it an edge, Bloomberg said.
Incidentally, Musk was supposed to visit India last Monday and meet with Prime Minister Narendra Modi to unveil Tesla’s India plans. The billionaire, however, cancelled the visit in the last hour, citing “very heavy Tesla obligations.”
Wedbush analyst Daniel Ives said that Musk visited China with a “laser focus on cutting the ribbon on the long awaited rollout of FSD software and permission/approval to transfer data overseas.”
Calling the visit a “watershed moment” for Musk and China, the analyst said “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.”
He noted that data collected by its Chinese fleet has so far been stored in Shanghai since 2021.
“If Musk is able to obtain approval from Beijing to transfer data collected in China abroad this would be a ‘game changer’ around the acceleration of training its algorithms for its autonomous technology globally,” Ives said.
He added that the trip would also hold significance for Tesla and Musk to further bolster their EV presence within the Chinese market at a critical juncture.
“While demand challenges exist in China for Tesla, the Street is looking through this painful transition period for the long term growth story to emerge for Musk & Co. with FSD a key ingredient in that recipe for success,” Ives said.
The analyst maintained an “Outperform” rating and $275 price target for the stock.
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