Tesla FSD in China could add $2.3 billion in annual earnings by 2030: Bank of America

2024.05.01 3 min read

Bank of America seems to be seeing the potential of Full Self Driving (FSD) for Tesla’s future in China. In a note, the bank noted that FSD has the potential to boost the electric vehicle maker’s earnings by $2.3 billion by 2030 if the advanced driver-assist suite sees increased adoption among the company’s customers in China.

Elon Musk’s unannounced trip to China this past weekend suggested that Tesla is laying the foundation for FSD’s release in the country. This was hinted at in Tesla’s partnership with internet giant Baidu for navigation and mapping data. The China Association of Automobile Manufacturers also noted that Tesla has cleared data security and processing requirements in the country.

FSD (Supervised) has so far only been released to the United States and Canada. Thus, the system’s most advanced features are only available to consumers in the two countries. In the US, FSD can be purchased outright for $8,000 or subscribed as a service for $99 per month. FSD is available for Chinese customers for RMB 64,000 ($8,800), but no subscriptions are available yet.

As noted by Bank of America, if Tesla releases FSD as a $99 service in China, and if a quarter of the estimated 1.6 million Tesla drivers in the country subscribe to FSD, it could provide Tesla with half a billion in annual revenue, as noted in an Insider report.

“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 noted.

Bank of America noted that FSD may also generate zero earnings in China if Tesla gets pressured to release the system at no cost to consumers to give itself an edge against rivals in the country. Even in such a scenario, however, Bank of America noted that Tesla will still benefit from China’s FSD users as they would likely accelerate the system’s neural network training.

“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 noted.

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