Tesla Competes Against Chinese Rivals 'With One Hand Tied Behind Its Back': Analyst

Tesla, Inc. TSLA shares are plunging Thursday as the stock extends its three-day losing streak. Adding to the EV giant’s troubles, an analyst reiterated a Sell rating on the stock based on the rollout of FSD features in China.

What To Know: The limited FSD features being rolled out in China are similar to those included under the company's full self-driving software in the U.S., according to an app notification from the company shared by enthusiasts on social media. Vehicles will be updated with new features such as identifying traffic lights, allowing for automatic lane changes, among others, the notification said.

Expert Take: Guggenheim analyst Ronald Jewsikow on Monday reiterated a Sell rating on Tesla and pointed to potential issues with the China FSD launch.

Jewsikow said that while the launch is positive for Tesla, Guggenheim saw the company competing against its Chinese rivals "with one hand tied behind its back."

The analyst pointed to comments from CEO Elon Musk that revealed training of FSD in China was being done with open-source images and videos rather than proprietary vehicle data. Tesla is at a disadvantage compared to Chinese EV makers which do not have the same vehicle data restrictions, Jewsikow said.

Jesikow is "skeptical" of Tesla's ability to price for FSD in China, "though the deferred revenue recognition potential could be an item to monitor in [the] first quarter."

In China, FSD is priced at 64,000 yuan (about $8,830) above the purchase price of the vehicle. There are more than two million Tesla vehicles in the country, though it is unclear how many vehicle owners have paid for the service.

TSLA Price Action: According to Benzinga Pro, Tesla shares are down 8.26% at $303.55 at the time of publication Tuesday.

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