Tesla (NASDAQ:TSLA) has won tentative approval from Beijing to launch its driver assistance software in China, the Wall Street Journal reported on Monday.
According to the report, this development occurred during a surprise visit by CEO Elon Musk to Tesla's largest market outside the US.
Chinese authorities have agreed to allow Tesla to introduce its Full Self Driving solution, leveraging mapping and navigation technology from Baidu (NASDAQ:BIDU), a Chinese tech giant.
TSLA shares jumped more than 6% in premarket trading Monday and BIDU stock rose 5%.
Through this collaboration with Baidu, Tesla not only acquired the necessary technological framework but also addressed key regulatory concerns about data security, easing the path for FSD’s deployment.
Beyond its established search engine operations, Baidu has ventured extensively into autonomous driving and artificial intelligence technologies.
The green light from Beijing follows discussions between Musk and high-ranking Chinese officials, including Premier Li Qiang, a former Communist Party leader in Shanghai where Tesla built its manufacturing base.
Moreover, during his visit, Musk met with Robin Zeng, the chairman of Contemporary Amperex Technology, a key supplier of batteries to Tesla, in Beijing.
"Musk winning FSD approval in the key China market is a watershed moment for the Tesla story in our view," Wedbush analysts said in a note.
"While 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 is now a done deal," they added.
"If Musk is able to obtain approval from Beijing to transfer data collected in China abroad this would be pivotal around the acceleration of training its algorithms for its autonomous technology globally."