Tesla Stock Jumps 4% as Musk Joins Trump's China Trip — What It Means

Monday, Tesla (TSLA) shares went up between 2.8% and 4%, bringing the price of the stock to around $440. This made the market value of the company about $1.56 trillion. The trigger had nothing to do with delivering cars or making money every three months. It was a list of guests.

There were rumours that President Trump had asked Elon Musk to join a group of important people going to Beijing this week for a meeting with Chinese President Xi Jinping. On the list are also Tim Cook of Apple, Larry Fink of BlackRock, Stephen Schwarzman of Blackstone, and David Solomon of Goldman Sachs.

This group of powerful American businesspeople shows that the meeting is meant to be important, not just a show. Trade, AI, export controls, Taiwan, and the ongoing war with Iran are some of the things that are likely to be on the agenda.

For Tesla in particular, having Musk in those conversations has clear business effects. China is a big part of the company's manufacturing, exporting, and long-term growth plans. This means that any improvement in business ties between the US and China is a big plus, even before a single extra car is sold.

The China Sales Data Was Ugly — and Markets Largely Ignored It

Here's what made Monday's session so tense: Tesla's retail sales in China dropped 9.66% in April to 25,956 cars, while China's overall passenger car market fell 21.6% year-over-year, marking its seventh straight monthly drop.

Cui Dongshu, secretary-general of the China Passenger Car Association, said that slow demand for cheaper models was the main thing holding back the rebound. This "key bottleneck" has been going on for most of 2025.

China's new-energy vehicle market includes both battery electric vehicles (EVs) and plug-in hybrids. Tesla has about 3.1% of this market. When you look at what local competitors are doing, that number seems to be under more and more pressure. In April, BYD sold 182,025 NEVs. Xiaomi sent 36,702 items. Both cars beat Tesla's local sales record by large amounts, and neither is lowering prices or adding fewer features.

The drop in store sales isn't just a one-month thing; it's a sign of how competitive things have become for Tesla in China over the past year. There is now a big difference in technology between American and foreign brands, and these brands also offer better prices than Tesla, which is hard for the company to compete with in a market where customer confidence is already low.

Exports from Tesla's factory in Shanghai rose 80.04% in April to 53,522 cars, which eased the blow. The Shanghai plant doesn't just supply cars to customers in China; it's also one of Tesla's main export hubs, sending cars to customers in Europe, Asia, and other places. Strong exports keep factories busy even when local demand drops. This helps the manufacturing economy even though the retail number is lower than expected.

That difference—weaker sales in the U.S. compared to exports—is what buyers had to quickly figure out when the stock market moved on Monday. Instead of focusing on the weak domestic demand, the market decided to pay attention to the diplomatic boost and the strength of exports. The next few months of data from China will show if that's the right balance.

Musk in Beijing: What's Actually at Stake for Tesla

Musk isn't just interested in the offer to join Trump's China delegation. Full regulatory approval for self-driving cars in China is still one of Tesla's most important near-term goals. This is the kind of problem where high-level diplomatic engagement can speed things up that regulatory processes alone can't.

Tesla's CFO, Vaibhav Taneja, told investors in April that the company is now aiming for FSD approval in China sometime in the third quarter, instead of the first quarter as planned. In places where it's required, FSD still needs both regulatory approval and to follow the rules for human supervision.

The business impact is big: if the FSD rollout in China is approved, Tesla would be able to make software subscription income from one of the world's biggest auto markets. This would change Tesla's revenue mix in a way that investors have been waiting for years.

Going to meetings with Xi doesn't mean that regulations will be sped up, but it does show some goodwill between the two countries, which could make it easier for the kinds of talks that happen before technical decisions.

Along with the larger trade and AI talks that Trump's delegation is likely to have, the trip to Beijing could be a turning point in Tesla's China strategy that goes far beyond any single month's retail sales numbers.

The Bull Case: You're Buying Optimus, Not Just a Car Company

Analysts who price Tesla based on car deliveries and automotive margins have been confused for a long time about how much the stock is worth. Alexander Potter of Piper Sandler, who has an Overweight rating and a $500 price target on the stock, gave the framework that explains why it keeps defying normal car sector multiples.

Potter's model, which includes 17 product lines, says that Tesla's real value is around $400 per share, and that's before Optimus, the company's robotic robot project, is given any value. "At $400 per share, we think investors can get Optimus for free," he said. At $440 on Monday, the market is starting to price in something for the robotics option, but not as much as what Optimus could possibly represent if it manages to scale.

Over the past two years, the main idea behind investing has changed a lot. Tesla's institutional shareholders see the company more and more as a platform for AI, software, and robots that also makes cars, not the other way around. Robotaxi licensing, FSD subscription income, Optimus deployment, and energy storage are all ways to make money that have software-like margins and aren't shown in China's monthly retail sales numbers.

That doesn't mean the car industry isn't important; it still makes money that pays for everything else. But this explains why a 9.7% drop in retail sales in China leads to a 4% rise in TSLA: the market is pricing in a different future than the one that can be seen in April's delivery numbers.

The Bear Case Doesn't Require Much Imagination

There are real risks, and some of them are getting worse at the same time.

China's domestic market might not come back any time soon. At the price points where most Chinese consumers shop, BYD and new domestic brands have real product benefits, and the macroeconomic environment that is lowering demand for passenger cars doesn't seem to have a clear way to turn things around. In the event that Tesla's retail sales in China keep going down, the factory's ability to make money will rest on exports from Shanghai, which makes it vulnerable.

Delays in getting FSD approval are already putting things behind schedule. Getting approval from China in the third quarter is still a few months away, and if there are any more problems with the rules, it will take even longer to recognise software income, even though the market still prices it as happening soon.

Remember that exposure adds noise to operations. Tesla is recalling 173 Cybertrucks from the model years 2024–2026 because of a risk that the wheel studs will break because of cracks in the rotors. Also, more than 200,000 Tesla cars are being recalled because of a problem with the software in the rearview camera. The company says that neither recall has caused any accidents, injuries, or deaths. However, repeated safety actions for a high-priced brand have a cumulative effect on the brand's image.

The valuation doesn't leave much room for mistakes in performance. A stock price of $440, which is well below what it is selling for now, means that any significant miss on FSD, Robotaxi, or Optimus timelines is quickly reflected in the price, rather than being quietly taken in.

What the Week Ahead Actually Decides

For Tesla stock, the major event that will have the most direct effect is the summit in Beijing. Even if Tesla doesn't make any specific promises, a meeting that goes well and shows that business ties between the US and China are getting better tends to make TSLA go up because it means that things are getting better for Tesla's China business. If there is conflict at the meeting, or if Musk's presence causes problems instead of solutions, it takes away the catalyst that Monday's rally was pricing in.

After Beijing, the next big key driver is the FSD China approval timeline. A proof in Q3 would support the idea that software sales are about to reach a turning point. Investors have been giving regulatory deadlines the benefit of the doubt for several quarters in a row, so any further delays would test their patience.

The question that April's numbers don't answer is whether exports and future software sales can truly make up for falling demand in China. The market said yes on Monday, at least for now, and a political boost helped cover it. The next few months of data will show if that answer is still correct.