Tesla’s Full Self-Driving (FSD) suite’s potential arrival in the Chinese market can add $2.3 billion in annual earnings by 2030, according to Business Insider reports, citing Bank of America’s forecast.
BoA’s 2030 FSD forecast
The Bank of America noted in a note that FSD’s success prospects in China could further increase Tesla’s annual earnings by $2.3 billion by the end of the decade.
The BoA estimates that if Tesla offers FSD at $99/month in China and if at least one-fourth of the 1.6 million Tesla owners subscribe, the annual revenue could increase by half a billion.
“But with a gross margin likely to exceed 70% the earnings benefit could be ~$350 million. This number could increase meaningfully over time and, based on IHS projections for TSLA’s China auto sales, could be $2.3 billion in annual earnings by 2030 under the same assumptions.”
Bank of America
Another possible scenario
The Bank also acknowledges another possible scenario where FSD may fail to yield any earnings in China.
It will likely happen if the American electric automaker loses to heavy pressure, potentially prompting it to offer the FSD at no cost.
Nonetheless, BoA remains optimistic that Tesla will still gain significant headway in China as launching the FSD for free will make its offerings more competitive. In addition, it can also help Tesla in accelerating the FSD’s neural net training to gain further improvements.
“Competition is increasing from domestic manufacturers, and FSD will help TSLA catch up to, and potentially exceed, other EV offerings on the market. Combined with recent price cuts in China (by RMB 14,000, or ~$1,930), this could spur volume growth.”
Bank of America
Tesla FSD’s recent China breakthrough
Chief Executive Elon Musk recently shocked the electric vehicle industry with his visit to China after canceling his trip to India.
The Tesla boss is reportedly establishing the foundation of the planned FSD launch in the world’s largest auto market.
Tesla formed a partnership with multinational tech company Baidu to solve the regulatory hurdles impeding FSD’s rollout in China, including navigation and mapping data.
The China Association of Automobile Manufacturers (CAAM) confirmed that the Musk-led company successfully passed all the data security and processing requirements for the FSD.
As a result, the FSD software gained tentative approval from Chinese regulators.
