shares Tesla Shares of electric carmakers rose sharply on Monday, on track for their best day since March 2021, after the electric carmaker achieved a milestone to roll out advanced driver-assistance technology in China.
The company's stock price rose more than 15% as investors reacted to the news surrounding Tesla CEO Elon Musk's visit to China.
Tesla said on Sunday that local Chinese authorities had removed restrictions on its cars after passing the country's data security requirements.
The move has raised expectations that Tesla's driver-assistance program, Full Self-Driving, or FSD, will soon be available in the country, which is the largest market for electric vehicles.
While Tesla electric cars are some of the most popular cars in China, they have reportedly been banned from some government-related properties due to data security concerns.
Separately, the Biden administration earlier this year announced an investigation into whether cars imported from China pose national security risks due to their ability to collect potentially sensitive data.
FSD is an upgrade to Tesla's Autopilot Assistant. Tesla has offered its FSD technology in China for years, but with a restrictive feature set that limits it to operations, such as automatic lane changing.
Tesla does not yet manufacture or sell cars capable of full self-driving. It sells “Level 2” driver assistance systems, marketed under the FSD brand name.
Musk's company has been sued in the US by the California Department of Motor Vehicles for false advertising of its self-driving driver assistance and full self-driving systems.
Tesla responded that the DMV had been aware of its use of these brand names for years and had chosen to take no action. The company believes that California's law regarding advertising of self-driving systems violates freedom of expression.
Overcoming major obstacles in China
Data security concerns have been a major hurdle preventing Tesla from achieving full deployment of the system in China.
Tesla has also reportedly struck a deal with Baidu that would give Musk fixed access to the Chinese internet giant's mapping and navigation technology for Tesla's FSD feature.
Reuters, citing two anonymous sources familiar with the matter, reported that the agreement will allow Tesla to benefit from a license for the Baidu Maps service, which is a requirement for intelligence driving systems to operate on public roads in China.
CNBC was unable to independently verify the report. It was not possible to obtain immediate comment from Tesla and Baidu.
Under the license, which foreign companies can only obtain in partnership with local Chinese companies, Tesla will be allowed to legally operate FSD on Chinese roads, and its fleets will be able to collect data on traffic, road and road signs.
Tesla's progress toward bringing its FSD technology to China represents a major win for the company at a time when it faces intense competition in the Chinese market. Domestic rivals, such as Warren Buffett-backed electric car maker BYD, Nio, and XPeng, have intensified their rivalry with Tesla in recent years.
BYD was temporarily the world's largest electric vehicle maker, producing more than three million new energy vehicles in 2023. The company recently lost its crown as the world's largest electric vehicle maker, after sales fell 43% in the first quarter.
— CNBC's Evelyn Cheng contributed to this report.
Clarification: The text of this story has been modified to clarify that Tesla has achieved a milestone to roll out “Full Self-Driving,” the brand name for its driver-assistance technology, in China.
