Musk in China, agreement with Baidu for Tesla's autonomous driving. The share price flies

The Beijing government has given a preliminary green light to an agreement between Tesla and the Chinese search engine giant Baidu, which has expanded its interests to autonomous driving and artificial intelligence. Even Apple has chosen Baidu for its upcoming iPhone 16 for the Dragon market. The partnership would involve the use of Baidu's maps and the distribution in China, at a more advanced level, of Full Self-Driving (Fsd), the assisted driving software on board Teslas.

It all happened during the unexpectedly quick (less than 24 hours, between Sunday and Monday) tour of China by CEO Elon Musk. The entrepreneur also met with Chinese Prime Minister Li Qiang, whom he met during Tesla's launch in China. On Musk's agenda was actually a meeting with Indian Prime Minister Narendra Modi (Tesla is negotiating better fiscal conditions for entry into India), which slipped.

The share price rallied from premarket onwards and then almost +17% to $196 (the previous close had been at $168) and closed at $194 (+15.4%). Since Tuesday 23 April, when Musk announced that the actually the Model 2, i.e. the $25-30,000 'cheap' Tesla, could be produced in 2025, the group's shares have gained 36%, taking its capitalisation back above $600 billion. The drop in 2024 was reduced from 33 per cent to 22.6 per cent. And short sellers, in just four days, lost nearly $5.5 billion, according to data from S3 Partners.

During meetings in Beijing, the currently third-richest man in the world overcame some regulatory hurdles that prevented him from distributing a full version of his driver assistance software in China, where 1.7 million Teslas are on the road. The request to transfer the data to the United States, however, has not yet passed. As of 2021, Chinese regulators have required Tesla to store all data collected from its Chinese fleet in Shanghai. Musk, however, needs to train the algorithms dedicated to autonomous driving, having recently announced that he will introduce Tesla's robotaxis on 8 August.

Be that as it may, the tycoon takes a major step forward, because the version of the Fsd available until now in China offered limited functions. This resulted in a technological gap with the best Chinese competitors. According to McKinsey, 64% of Chinese consumers choose a car based on its highly automated driving features (Level 3, as opposed to the Fsd's Level 2, which requires the driver's continuous attention).