Summary
– Bank of America sees the potential for Tesla’s Full Self Driving (FSD) in China to boost earnings by $2.3 billion by 2030
– FSD has only been released in the US and Canada, with no subscriptions available in China yet
– If Tesla offers FSD as a $99 service in China, it could generate half a billion in annual revenue
– China’s FSD users could help accelerate the system’s neural network training
– Bank of America notes that FSD could help Tesla compete with other EV offerings on the market in China
Article
Bank of America believes that Tesla’s Full Self Driving (FSD) system has the potential to increase the company’s earnings by $2.3 billion by 2030 if it sees increased adoption among customers in China. Elon Musk’s recent trip to China hinted at Tesla laying the foundation for the release of FSD in the country, especially considering Tesla’s partnership with Baidu for navigation and mapping data, and the clearance of data security requirements in China.
Currently, FSD is only available in the United States and Canada, with the most advanced features limited to consumers in these countries. In the US, FSD can be purchased outright for $8,000 or subscribed to as a service for $99 per month. In China, FSD is available for RMB 64,000 ($8,800) but subscriptions are not yet offered. If Tesla were to release FSD as a $99 service in China, and if a quarter of the estimated 1.6 million Tesla drivers in the country subscribe, the company could generate half a billion in annual revenue.
Bank of America predicts that Tesla could earn $2.3 billion annually by 2030 from FSD in China, assuming a high gross margin and increasing adoption rates among customers. The bank also acknowledges the potential scenario where Tesla may have to offer FSD for free in China to compete with local rivals. Even in that case, Tesla would benefit from accelerated neural network training from FSD users in China.
The bank notes that competition in the Chinese EV market is growing, and FSD could help Tesla catch up and excel in comparison to other offerings. Combined with recent price cuts in China, increased volume growth could be spurred. Ultimately, Bank of America sees the potential for significant earnings from FSD in China for Tesla, but also acknowledges the various factors that could impact the system’s adoption and revenue generation in the country.
Overall, Bank of America’s analysis suggests that Tesla’s Full Self Driving system has promising potential in China, with the possibility of generating substantial earnings for the company by 2030. The bank highlights the importance of factors such as pricing strategies, competition in the market, and the regulatory environment in China in determining the success of FSD in the country. Tesla’s continued focus on innovation and adaptation to local conditions will be crucial in maximizing the benefits of FSD in the rapidly growing Chinese EV market.
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