Tesla (TSLA) chief executive Elon Musk has teamed up with tech group DeepSeek to revitalize its ailing business in China, just months after slating the company’s achievements.
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According to a report in Bloomberg, Tesla is joining forces with DeepSeek and ByteDance’s Doubao on adding new tools to its cars in China. Tesla stock was 2% higher in early trading.
Voice Command
It is understood that Doubao will work on voice command-related tools like the temperature in a Tesla, navigation, and in-car entertainment, while DeepSeek will handle the AI side of things.
“While many recognize DeepSeek’s achievements, this represents just the beginning of China’s AI innovation wave,” Louis Liang, an AI sector investor with Ameba Capital, told Bloomberg. “We are witnessing the advent of AI mass adoption, this goes beyond national competition.”
Tesla cars in the U.S. currently use an AI model created by xAI’s Grok. Bloomberg believes that rolling out Grok in China has hit some legal hurdles forcing Musk to look elsewhere.
Selecting DeepSeek however is also quite the volte-face for Musk who questioned the claims of DeepSeek when it emerged in January this year with a low-cost but just as effective AI model. The launch rattled the cages of the Magnificent Seven big beasts blasting their share prices and valuations, though they have since recovered.
Musk, at the time, questioned the transparency and validity of the low-cost claims.
Chinese Stutter
However, the company’s stuttering performance in China seems to have forced him to eat his words. Chinese deliveries dropped 8.4% from December to June compared with the same period last year. Sales of China-made cars fell 8.4% in July.
That matters given the size of the EV market in China and Tesla’s exposure to it – see below.
It has been hit by greater competition from Chinese rivals such as Xiaomi (XIACF) which are boasting lower prices, better tech and more range.
Back in June, Xiaomi said it received 200,000 orders in just three minutes after the launch of its new YU7 electric SUV. It is priced at around $35,000, making it 4% cheaper than Tesla’s rival Model Y in China.
It also boasts a top range of 835 km, leaving the Model Y with its 719 km reach way behind in its rearview mirrors. It can also accelerate from zero to 62mph in just 3.23 seconds.
Other exciting features include an Nvidia (NVDA) Drive AGX Thor in-vehicle computing platform and active air suspension.
In response, Tesla has recently begun taking orders for its new Model Y L in China, priced from about $47,200. Tesla is also preparing to launch a longer-range rear-wheel drive Model 3 in China to revive its fortunes.
Is TSLA a Good Stock to Buy Now?
On TipRanks, TSLA has a Hold consensus based on 14 Buy, 15 Hold and 8 Sell ratings. Its highest price target is $500. TSLA stock’s consensus price target is $307.23, implying a 5.74% downside.
