Tesla’s stock rose early, then fell, then rose again on Wednesday as CEO Elon Musk heads to China.
Shares of the electric-vehicle maker traded up early, then dropped to as low as $430.21 before rising to $445.27, up 2.7% on the day, while the S&P 500 gained 0.6% and the Dow Jones Industrial Average fell 0.1%
Tesla shares fell 2.6% on Tuesday, snapping a four-day winning streak that raised Tesla stock more than 14%. One thing sending shares higher was the hope that Tesla was close to receiving approval to sell its Full Self Driving, or FSD, driver-assistance product in China.
Americans can pay $99 a month for FSD. In April, Tesla reported 1.3 million FSD subscriptions at the end of the first quarter, up from about 850,000 a year ago. A Chinese FSD launch would represent some AI progress at Tesla, which has pinned its future on AI applications such as FSD, robo-taxis, and humanoid robots.
The importance of progress for Tesla shares shouldn’t be understated. Tesla is driven by narrative/sentiment, not fundamentals,” wrote UBS analyst Joseph Spak in a recent report, adding that Tesla’s first-quarter earnings report reinforced the AI narrative.
“On the one hand, we got a number of roadmap updates…However, this is where numbers start to add some gravity as physical AI is expensive,” added Spak. Tesla is planning to spend $25 billion on CapEx in 2026, up from less than $9 billion in 2025. Spak expects capital spending to remain elevated for years. “Tesla’s physical AI ventures offer large potential revenue opportunities, but could take a while to get there.”
Now, Musk and his AI ambitions are in China, after tweeting that he was aboard Air Force One early on Wednesday.
He will be joined in China by a bevy of U.S. business leaders, including GE Aerospace CEO Larry Culp, Boeing CEO Kelly Ortberg, Nvidia CEO Jensen Huang, Apple CEO Tim Cook, Citi CEO Jane Fraser, and others.
“I will be asking President Xi, a leader of extraordinary distinction, to ‘open up’ China so that these brilliant people can work their magic, and help bring the People’s Republic to an even higher level,” said President Donald Trump in a Tuesday post on Truth Social.
The trip has delayed a delivery event for the final Model S and Model X vehicles. Production of those cars stopped earlier this month as Tesla prepares to turn that production capacity into a line making humanoid robots.
Investors are waiting to see the capabilities of version three of Tesla’s humanoid robot, Optimus. That could happen this summer, according to the company. Tesla has been reticent to showcase the robot, citing competitive threats. “We find our competitors do a frame-by-frame analysis whenever we release something and copy everything they possibly can,” said Musk on Tesla’s Apr. 22 first-quarter earnings conference call.
FSD overseas and robot production represent two potential catalysts for Tesla stock. Coming into Wednesday trading, Tesla stock was down 4% this year and up 30% over the past 12 months.
Write to Al Root at allen.root@dowjones.com