On Monday (April 29th), Tesla's stock price opened high and rose nearly 18% during the day, ultimately closing at $194.05, an increase of over 15%, the best daily increase in more than three years, with a market value increase of about $80 billion.

The rise in Tesla's stock has also boosted Musk's wealth. In the past five days, Musk's net assets have increased by $37.3 billion, marking the largest weekly increase since March 2022. On Monday alone, Musk's wealth increased by $18.5 billion.

Tesla will cooperate with Baidu

The reason why Tesla's stock price can sweep away the decline since the beginning of this year and emerge from the sharp rise is related to the possibility of Tesla's fully autonomous driving (FSD) technology entering China.

On the evening of Musk's visit to China on Sunday, the official official account of the China Association of Automobile Manufacturers issued a notice (the first batch) on the detection of the four safety requirements for automobile data processing. It is mentioned that after testing, Tesla's 2022 and 2023 Model 3/Y both meet the four compliance requirements for automotive data security.

Industry insiders believe that Tesla has passed the authoritative standards and requirements of China's national vehicle data security, which is conducive to the comprehensive lifting of restrictions on Tesla's movement and parking in some sensitive areas.

Subsequently, there were reports that Tesla would use Baidu's advanced assisted driving map in the Chinese version of FSD.

Due to the high sensitivity of map information and data collection, as well as the involvement of national security, some analysts had previously predicted that Tesla would likely adopt a partnership with Chinese companies.

Tesla's choice to collaborate with Baidu is also expected. Firstly, Baidu meets the qualifications required for Tesla's FSD deployment. Among nearly 20 qualified suppliers with top-notch map qualifications in China that can be applied to driving assistance functions, Baidu holds a position. Collaborating with Baidu means Tesla can leverage its lane level navigation and map services. Secondly, the cooperation between the two sides has a long history. Since 2020, Tesla's in car navigation has been using Baidu Maps.

According to media reports, information on the website of the Ministry of Natural Resources shows that Baidu Maps has recently obtained approval for multiple "Advanced Assisted Driving Maps" from the Ministry of Natural Resources. According to insiders, among the approved maps, there is a GS (2023) 4634 advanced assisted driving map submitted by Beijing Changdiwanfang Technology Co., Ltd. for navigation. This map is a lane level map jointly completed by both parties, and is exclusively customized by Baidu for Tesla.

Previously, there were reports that Musk sought approval from relevant authorities to transfer the data he collected in China to foreign countries to train algorithms for autonomous driving technology. It is currently unclear whether the cooperation with Baidu means that Tesla has not been allowed to export Chinese FSD data overseas.

Tesla has not yet revealed when the Chinese version of FSD will be launched. But Tesla China's user app has changed the description of the FSD service purchase page from "to be launched later" to "to be launched soon".

In addition, the outside world is also very curious about the pricing of Tesla's Chinese version FSD service. As a reference, Tesla's FSD subscription price in the United States is $99 per month, with a purchase price of $8,000.

Anyway, there has been significant progress in Tesla's FSD entry into China, which is good news for Tesla's long-term investors. As Tesla's sales decline, autonomous driving (including FSD and Robotaxi) and next-generation low-cost cars have been seen as Tesla's future growth drivers.

According to S&P Global Mobility's outlook, by 2035, China will become the world's largest market for robot taxis and assisted driving technology. This indicates that in Tesla's future growth chart, China remains an important market that cannot be ignored.Morgan Stanley's automotive analyst Adam Jonas said on Monday, "Although Tesla faces demand challenges in China, Wall Street is going through a painful transition period in hopes that Musk can achieve long-term growth, and FSD is a key factor in its success."

Tesla surges, bears hit hard

Last Tuesday (April 23rd), Tesla released its first quarter financial report for this year. At the subsequent earnings conference call, Musk made it clear that the company had not given up on developing a new generation of low-priced cars, and stated that "the new model will start production in early 2025 even if it is not later this year." This is even earlier than the previously promised end of 2025.

After the news was released, Tesla's stock price was boosted, with the stock soaring nearly 40% in the four trading days from last Wednesday to this Monday.

According to data from S3 Partners, short positions on Tesla incurred approximately $5.5 billion in losses during the four trading days mentioned above. Especially Monday's sharp rise dealt a heavy blow to bears, directly causing them to lose $2.93 billion, thus erasing all of their April earnings and turning them into losses of $2.11 billion.

However, by extending the timeline, Tesla's stock price has still fallen by nearly 20% this year, and investors who short Tesla still make about $4.1 billion in profits so far this year.

IHOR Dusaniwsky, the head of predictive analysis at S3 Partners, believes that Tesla's recent gains in the next few trading days are not short selling, "because we have actually seen short selling behavior in this rebound, with over 2 million new short positions sold last week."

The so-called short selling is a special situation that leads to a rapid increase in the stock price of stocks or other tradable securities. This situation arises because a large number of previously established short positions have led to insufficient supply of specific securities.

Dusaniwsky also pointed out that Tesla is the third largest short position company in the US stock market, only behind Nvidia and Microsoft. Currently, Tesla's short positions reach $18.53 billion, accounting for 3.97% of its publicly issued shares, equivalent to approximately 109 million shares, with a three-year high in short interest.

In recent months, the continuous decline in Tesla's stock price has been mainly affected by weak demand for electric vehicles and a decline in the company's sales. During last week's earnings conference call, Musk has been working hard to mitigate the impact of declining sales.

He emphasized that Tesla should be seen as an artificial intelligence or robotics company, not just an electric vehicle company. Musk believes that if people evaluate Tesla like they would a car company, it would be a fundamental mistake. And he said, "If anyone doesn't believe Tesla will solve the problem of autonomous driving, I don't think they should become investors in the company."