Elon Musk's visit to China boosts Tesla's stock, but Fuguo Bank pours cold water: limited impact on EPS, many details still unclear
Elon Musk suddenly visited China and announced a partnership with Baidu, causing Tesla's stock price to surge by 15%. Analysts at Fuguo Bank believe that the impact of the partnership is limited as details are yet to be determined. Tesla's FSD system is solely based on vision, and the role of Baidu in it remains unclear. Chinese electric vehicle manufacturers may become competitors. Morgan Stanley stated that Musk's focus concerns may be alleviated. Overall, Musk's visit to China has brought positive effects to Tesla, but further observation is still needed
According to the information from Zhitong Finance APP, after Elon Musk's sudden visit to China and announcement of expanding cooperation with Baidu (BIDU.US), Tesla (TSLA.US) surged more than 15% at Monday's close. However, Colin Langan, an analyst at Wells Fargo, was surprised by this as the bank believes the impact on earnings per share is limited and the trading details are far from being determined.
"The cooperation with Baidu helps alleviate regulatory concerns about data security. However, the details of economic and data sharing cooperation between the two parties have not been disclosed. In addition, Tesla's FSD system is solely based on vision and not reliant on maps, so the role of Baidu in FSD technology remains unclear."
Langan also warned that shared data may be restricted, which could limit Tesla's ability to leverage technological advancements seen in the United States.
Another obvious issue is that Chinese electric vehicle manufacturers are fast followers and may pose competition to Tesla in pricing. Advanced driver assistance systems have become mainstream in China, with companies like XPeng (XPEV.US) being prominent participants. Li Auto (LI.US) and BYD (01211) also have their own plans for advanced driver assistance systems.
On the other hand, Morgan Stanley has a different stance on Tesla's development. Notably, analyst Adam Jonas stated that investor concerns about Musk's focus on leading Tesla may be alleviated after his visit to China. Jonas mentioned that potential agreements with the Chinese government in areas like autonomous driving/FSD are surprising and warrant further research and understanding