Over the past few days, Tesla (NASDAQ: TSLA) bears were questioning the fate of Tesla in China thanks to the increased tensions between the U.S. and the country, but the automaker managed to prove them all wrong once again. Tesla is pushing plans to build a data center in China to transfer the data collected by its vehicles back to the U.S.. However, that’s not everything, as it’s also exploring a partnership with a Chinese tech giant. On the other hand, Elon Musk made some bold claims about the upcoming huge improvements to Tesla’s full self-driving software, and these improvements are expected to make the software 10 times better. Additionally, the legendary investor Warren Buffett updated his long-term view on TSLA stock to answer the question of whether or not now is the time to invest in Tesla while the stock is relatively affordable compared to its long-term potential.
Tesla’s Data Center in China
Elon is currently pushing plans for building a Tesla data center in China to use the data collected by Tesla vehicles in the country to train the company’s FSD software and power Tesla’s AI ambitions. On top of that, the carmaker has been repeatedly trying to get approval to transfer data collected in China to the U.S. so it’s unclear whether Elon would proceed with both plans, or go with just one.
Theoretically, it would be better to proceed with both plans as this would give Tesla more data on FSD in both countries. Additionally, collecting and processing data in two countries will allow the automaker to speed up the process of training FSD and improve autonomous driving, which in return will be very useful for the long-awaited Cybercab in August.
Additionally, China is a perfect country to collect FSD data from rather than European countries. The reason behind this is, according to experts, China’s complicated traffic conditions with more pedestrians and cyclists than in many other countries like the U.S. provide more scenarios that are key for training autonomous driving algorithms at a faster pace, which would help Tesla solidify its position as the global autonomous driving leader.
Tesla’s Potential Chinese Partner
According to recent reports, Baidu (NASDAQ: BIDU), the Chinese IT giant which is also the world’s largest company in the field of driverless taxi services, is open for a partnership with Tesla. In fact, the general manager of Baidu’s autonomous driving division, Xu Baoqiang, has said that entering into a partnership with Tesla could be beneficial for both parties because, in this case, Tesla could use Baidu’s maps which will tremendously help develop its autonomous driving software to navigate the Chinese streets.
This will greatly benefit Tesla, as Cathie Wood’s Ark Invest recently said that by 2027, the robotaxi business alone could account for two-thirds of Tesla’s enterprise value. In other words, Ark Invest is saying that 74% of the upside for TSLA stock today could be from the robotaxi vision.
Also, when we look at the growth estimates of the robotaxi industry, Cathie’s huge upside becomes justified, since the robotaxi market was estimated to be worth $0.97 billion in 2022 and is likely to grow at a compound annual growth rate of 66.3% from 2023 to 2029 to reach $34.1 billion in 2029. Elon Musk is thinking in the same general direction, and that’s why he said investors shouldn’t buy TSLA stock unless they believe the company can solve autonomy.
Major Improvements in FSD
Elon said that Tesla’s next supervised FSD Version 12.4 software update will result in a “5 to 10x improvement in miles per intervention.” compared to the 12.3 version, according to his post on X.
Additionally, in his post, he said that FSD 12.5 will be out in late June, with which we will also see a major improvement in miles per intervention, which implies that it will go from approximately the estimated 3,600 miles per intervention, in the 12.4 version, to something close or even more than 10,000 miles per intervention.
On top of that, Elon mentioned in a post last week on X that 12.4 has almost completely retrained models and that the final touches are for comfort, as it sometimes accelerates or brakes too fast for most people’s taste.
With the unveiling of the dedicated Robotaxi this coming August 8th, it is then unsurprising that Tesla is putting a lot of resources into FSD and accelerating the system’s improvements immensely. After all, FSD will be a cornerstone for the “Cybercab”, which is essentially a vehicle that could very well take Tesla into its next growth phase.
Moreover, we have a video of testing Tesla’s FSD on roads where it wasn’t programmed. In a recent video posted by ElektroTimmy on X, it shows a Tesla driving through the streets of Moldova in Europe effortlessly.
Also, you have to keep in mind that FSD isn’t officially released anywhere in Europe except Germany. This means that if he could manage to use FSD perfectly fine in Moldova, this shows how well the software operates anywhere in the world since it’s essentially using cameras for navigation through the streets.
Therefore, it’s safe to say that you could use Tesla’s FSD anywhere with minimum to zero human interventions, even though Tesla is still working towards full autonomy, so imagine how the software will be once it’s completed.
TSLA Stock Forecast
If we do a quick search across the internet, it will be clear that there is fear when it comes to investing in Tesla today. That’s why it’s worth remembering the advice given by one of the world’s most prominent investors, Warren Buffett, where he famously said, “Be greedy when others are fearful, and fearful when others are greedy.”
While it’s very unlikely that Buffett will ever invest in TSLA stock, considering that he said at Berkshire Hathaway’s 2023 annual shareholder meeting that investing in the automotive industry is just too hard, thanks to the tough global competition, but he’s a fan of the company’s FSD software, and even though he has an insurance company that could get hit if FSD delivers on its promises.
He even said that if it manages to reduce accidents by 50%, then it’s going to be good for society. With that being said, Elon Musk’s goal is to make Tesla the most valuable company in the world one day and it will do that by making its full self-driving software more capable, which Elon is close to achieving.
Therefore, when viewing TSLA stock from the context of its future endeavors, its potential begins to shine through and hints that it is currently trading at a discount and this could be the sign to not miss the chance on TSLA stock while it’s cheap compared to its future potential.
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