Tesla stock rebounds 9.57% amid tariff talks and FSD launch
Tesla shares surged by 9.57%, reaching $272.60. This increase may have been influenced by potential changes in U.S. tariff policy towards Mexico and Canada, as well as reports on the development of autonomous driving technology in China. A meeting between Elon Musk and employees also contributed to the positive change.
The overall improvement in market sentiment supported the rise in Tesla's stock. Investors are hopeful that President Donald Trump will avoid implementing punitive tariffs on imports from Mexico and Canada in April. Tariffs pose particular challenges for car manufacturers who source many components from these countries.
According to Reuters, Tesla is preparing to launch its most advanced driver assistance system, known as Full Self-Driving (FSD), in the Chinese market. This information appeared on the social media profiles of the company's Chinese employees. Enhanced autonomous driving features may boost Tesla's vehicle sales, even though the company charges several thousand dollars for these features, while Chinese competitor BYD offers similar solutions at little to no cost.
Investors will closely watch how willing Chinese consumers are to pay for the FSD system and its impact on Tesla's market share in China. The introduction of FSD in China was anticipated, and the company also plans to introduce this technology in Europe later this year. While the development of FSD could bring benefits, some early gains in Tesla's stock likely stem from a rebound after significant declines.
Market turbulence and future prospects
On Friday, Tesla shares initially increased by 5.3%. The increase was already oscillating around 10%. The rebound is crucial because last week marked the ninth consecutive declining week for the company's stock, the longest negative streak in Tesla's trading history.
A previous increase following the presidential elections led to later corrections—from the elections on November 5 to mid-December 2024, the stock rose from about $250 to $490. Investors believed that the second Trump administration would benefit the car manufacturer, mainly through regulations facilitating the introduction of autonomous vehicles.
Since the January inauguration, when Tesla's stock began to decline, investors have focused more on the political activities of CEO Elon Musk and how they may discourage traditional Tesla buyers—people with left-leaning views interested in environmentally friendly solutions.
Did Musk save Tesla with a meeting?
Friday's jump followed a meeting between Musk and Tesla employees. For Wall Street, it was reassuring to see him focus on the car company instead of his fiscal duties in Washington. Gary Black, co-founder of the ETF Future Fund Active, stated that "Investors roundly cheered Elon’s vision, confidence, spirit, and calmness in praising employees for their efforts during the current media storm."
Wedbush analyst Dan Ives added that the speech "made a huge step forward in our view" and noted that many showrooms in the United States seem to be attracting new Tesla buyers. The result of all this volatility is shares that remained at around the same level before Monday's trading, although early gains still left Tesla's stock about 37% lower since the presidential inauguration on January 20.
In the coming days and weeks, further sales data will affect the ratings. Later this week, the European Automobile Manufacturers Association will release monthly sales data. In January, Tesla's sales in Europe fell by 45% compared to the previous year, partly due to a model change—Tesla is introducing a new version of the Model Y.
Then, on April 2, Tesla will present its first-quarter sales results. Wall Street expects sales of 414,000 vehicles, according to FactSet. However, the latest analyst estimates are closer to 360,000. In the first quarter of 2024, Tesla delivered 387,000 cars.
