Tesla Inc.’s stock soared by 10.4% in early trading today, fueled by a combination of promising developments in China and a shift in U.S. trade policy under President Donald Trump. The electric vehicle (EV) giant’s shares climbed to $274.72 by mid-morning, reflecting investor optimism over the long-awaited rollout of Tesla’s Full Self-Driving (FSD) software in China and indications that Trump may be softening his stance on tariffs—a move that could ease pressures on Tesla’s global supply chain and market competitiveness.
China’s FSD Breakthrough: A Game-Changer for Tesla
The primary catalyst for today’s stock surge appears to be fresh reports from Beijing indicating that Tesla is on the cusp of securing approval to deploy its unrestricted Full Self-Driving software in China, the world’s largest EV market. Tesla CEO Elon Musk has been aggressively pursuing this milestone for years, with the company’s advanced driver-assistance system seen as a cornerstone of its long-term growth strategy. Unlike the limited version of FSD currently available in China—restricted to features like automated lane changes—the full rollout would enable Tesla vehicles to navigate complex urban environments autonomously, a feat that could solidify its edge over domestic competitors like BYD and NIO.
Musk’s surprise visit to Beijing in April 2024 laid the groundwork for this development. During that trip, he met with Chinese Premier Li Qiang and other officials, reportedly securing tentative backing for FSD deployment and permission to transfer driving data collected in China overseas—a critical step for training Tesla’s autonomous algorithms globally. Since 2021, Tesla has complied with Chinese regulations by storing all locally collected data within the country, but recent relaxations in China’s cross-border data policies have opened the door for this pivotal shift.
Analysts view the FSD rollout as a “watershed moment” for Tesla. In 2024 alone, Tesla generated more than $21 billion from China, underscoring the stakes involved.
The timing couldn’t be better for Tesla, which has faced headwinds from softening EV demand and intensifying competition. Last year, the company reported its first annual delivery decline, with 1.8 million vehicles handed over to customers, prompting price cuts and layoffs. A successful FSD rollout could reinvigorate sales and bolster Tesla’s premium positioning, especially as Chinese rivals unveil cheaper models and advanced self-driving systems of their own.
Trump’s Tariff Pivot: Relief for Tesla and the Auto Industry
Adding to the bullish sentiment is President Trump’s apparent softening on tariffs, a policy shift that has sent ripples through global markets. Since taking office in January 2025, Trump has pursued an aggressive trade agenda, imposing 25% tariffs on imports from Canada and Mexico and an additional 10% on Chinese goods. These measures, aimed at curbing fentanyl trafficking and boosting U.S. manufacturing, initially sparked fears of retaliation and supply chain disruptions for automakers like Tesla, which relies on parts from all three countries.
However, in a statement over the weekend, Trump hinted at a more targeted approach, suggesting that tariffs could be “narrower and more strategic” than previously outlined. While details remain scarce, sources close to the administration indicate that Trump may exempt certain industries or companies—potentially including Tesla—due to their domestic manufacturing footprint and economic significance. Tesla assembles all its U.S.-sold vehicles in California and Texas, but roughly 20-25% of its parts come from Mexico, and key battery components like graphite and lithium-ion cells are sourced from China.
The prospect of tariff relief has eased concerns raised in a letter Tesla sent to the U.S. Trade Representative’s Office earlier this month. In that correspondence, the company warned that broad-based tariffs could expose it to retaliatory measures from trading partners, driving up costs for parts “difficult or impossible to source domestically.” Tesla’s Chief Financial Officer, Vaibhav Taneja, echoed this sentiment in a recent earnings call, noting that while the company has localized much of its supply chain, it remains reliant on global inputs.
Trump’s evolving stance may also reflect the influence of Musk, a close ally who heads the administration’s Department of Government Efficiency (DOGE). Musk, who spent over $250 million supporting Trump’s 2024 campaign, has emerged as a key advisor, advocating for policies that balance protectionism with the needs of innovative U.S. firms. “Elon’s voice carries weight,” said Gene Munster, managing partner at Deepwater Asset Management. “If Trump carves out exceptions for Tesla, it’s a signal that pragmatism might temper his trade war rhetoric.”
Market Reaction and Broader Implications
The Nasdaq rose 1% in early trading, buoyed by the tariff news and a broader market rebound, but Tesla’s 10% jump outpaced its megacap peers, underscoring the unique tailwinds lifting the stock. Apple, another company with significant China exposure, gained 2%, while Nvidia climbed 1.5% as tariff-related fears eased.
For Tesla, the dual developments could mark a turning point after a rocky start to 2025. The stock had shed nearly half its value since January, battered by weak sales in China and Europe, protests against Musk’s political activities, and investor skepticism about the company’s robotaxi ambitions. Today’s rally suggests a renewed confidence in Tesla’s ability to navigate both technological and geopolitical challenges.
Beyond Tesla, Trump’s tariff recalibration could have far-reaching effects on the auto industry. Rivals like General Motors and Ford, which rely heavily on cross-border supply chains, saw modest gains of 1-2%, while European automakers like Volkswagen and BMW remained cautious amid threats of retaliatory tariffs from the EU. China’s BYD, a fierce Tesla competitor, unveiled an ultra-fast charger this month, signaling that the race for EV supremacy is far from over.
Musk’s Balancing Act
Elon Musk finds himself at the center of this narrative, juggling his role as Tesla’s visionary leader with his influence in the Trump administration. Critics have questioned whether his political involvement—particularly his push to slash federal spending through DOGE—distracts from Tesla’s core business. Others argue that his proximity to Trump could shield Tesla from the worst of the trade war fallout.
Musk has remained characteristically vocal, posting on X this morning: “Great day for innovation and American manufacturing. FSD in China + smarter trade policies = big wins.” The comment, liked by over 100,000 users within hours, reflects his knack for shaping public sentiment—a skill that has helped Tesla defy gravity in the past.
Looking Ahead
As Tesla’s stock climbs, analysts are divided on its sustainability. Bulls point to the FSD rollout and tariff relief as catalysts for a prolonged rally, with some projecting a return to the $300 mark last seen in late 2024. Bears, however, caution that execution risks remain, from regulatory hurdles in China to potential backlash against Musk’s polarizing persona.
For now, Tesla investors are riding a wave of optimism, buoyed by the promise of autonomous driving and a more favorable trade landscape. Whether this marks the start of a new chapter or a fleeting reprieve in a volatile year remains to be seen. One thing is certain: with Musk at the helm and Trump in the White House, Tesla’s journey will continue to captivate—and confound—the world.
