After Musk's unexpected visit to China last week, the news that Tesla's Full Self-Driving technology (FSD) is about to land in China continues to ferment, and the market's enthusiasm for Tesla stock has risen significantly.
In the U.S. stock market overnight, Tesla shares jumped 12% at the open, rose more than 18% at one point during the session, and still rose at 15.3% at the close, the largest increase in three years. In the past five days, Tesla's stock price has risen by 37%, the best five-day gain since August 2020.
Morgan Stanley auto analyst Adam Jonas, who has long been bullish on Tesla, wrote in a note to clients:
The significance of Musk's visit to China is much more than just promoting the implementation of FSD in China. As Tesla's CEO, Musk slept on the floor or on a plane...... The message was clear: he's back.
Musk, it's back!
Jonas writes that investors are increasingly concerned about whether Musk will be able to fully commit to Tesla as he devotes valuable time to the so-called "anti-wake campaign" on the X platform. The analyst believes that Musk's weekend visit to China is a "commitment" to Tesla.
Even a small promise (such as Musk's unannounced visit to China) is significant here, helping to dispel investors' doubts about whether Musk is fully committed to Tesla, compared to his broader ecosystem of companies (e.g., SpaceX, X.AI, etc.).
It is worth mentioning that there is also a philosophical conclusion in the report:
The AI brain is looking for its robotic "body". And this body is the container that carries the "soul" of artificial intelligence.
Regardless of Tesla's future direction, investors can still favor the company, citing the fact that it has begun to merge artificial general intelligence with robotics, according to Jonas.
Large language models and robotics have long been viewed as two completely different fields of science. However, advances in large language models may accelerate the training and learning process of "robots", whether in the form of a "car" or a "humanoid" robot.
A watershed moment is coming?
Wedbush analyst Dan Ives, who is also a huge fan of Tesla, wrote in a report released Monday that Musk's trip to China was a "home run."
Ives added that the landing of FSD in China would be "a watershed moment in Tesla's narrative".
Tesla is facing demand challenges in China, and Wall Street is going through this painful transition period in the hope that Musk's company can achieve long-term growth, and FSD is a key factor in its recipe for success.
Jonas also believes that if FSD is successfully implemented in China, it will dispel the market's doubts about Tesla's profits in the Chinese market.
IVE has set a price target of $275 on Tesla stock and an outperform rating. Jonas is more optimistic about Tesla stock, maintaining a Buy rating on Tesla with a price target of $310.
Regarding when Tesla's FSD will land in China, at present, the official has confirmed that the ban has been "lifted", saying that the landing time is approaching.
According to Sina Technology, Tesla's user APP shows that the description of the purchase page of Tesla's official FSD service in China has been changed from "to be launched later" to "coming soon".
In addition, a screenshot of a WeChat chat circulating on the Internet shows that Tesla plans to open the "FSD Beta Function Internal Test Event" on April 30, which is aimed at "early purchase of FSD car owners".
According to the China Fund News last night, in response to the question of when FSD will land in China, Tesla China responded:
"It's hard to say the exact time at the moment, but it's estimated that it's coming soon. ”
At the same time, Tesla China also confirmed that the restrictions on the use of Tesla in various parts of the country have been lifted one after another.
In addition, it is worth noting that on the day of Musk's visit to China, Tesla passed China's automotive data security compliance requirements. According to media reports, Tesla will cooperate with Baidu in China on maps and navigation functions.
CICC's research report pointed out that if FSD is to be promoted in China, the entire set of data closed-loop needs to be in China, and it is necessary to prepare for data collection and model training, and consider whether the BEV perception scheme can be well adapted locally. In China, FSD mapping may need to cooperate with Chinese manufacturers, and Tesla needs to build a local computing center and set up a local algorithm adaptation team.
"The Largest AI Project on Earth"
Cathie Wood, Tesla's biggest fan on Wall Street and known as the "Wood Sister", commented on the social platform X last weekend that Tesla is working on "the biggest AI project on the planet."
Wood writes that she believes Tesla's AI investments "are differentiating it from automotive and tech companies."
Wood is bullish on Tesla for the long term, believing in the long-term value of fully autonomous driving and Robotaxi. As Tesla's stock price neared a 52-week low, Wood bought a lot of Tesla shares ahead of its first-quarter earnings report.
Wood tends to buy heavily when Tesla's stock price falls to its lows. As of April 29, Tesla stock was the largest holding in Wood's fund ARKK, with a weighting of 10.95%.
All in AI?
In recent weeks, Musk has been ramping up his pitch about FSD and artificial intelligence. Musk said on the first-quarter earnings call that "autonomous driving" is Tesla's current top priority.
Tesla's free cash flow in the first quarter was negative $2.5 billion due to a $1 billion investment in "AI infrastructure" and a planned launch of a robo-taxi service on August 8.
Over the weekend, Musk said on the X platform that Tesla will invest about $10 billion this year in AI training and inference, which is mainly used in cars.
Musk said:
Any company that doesn't invest at this level and can't do it efficiently can't compete.
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