Tesla’s market value rises by $82 billion on Monday, partially giving back gains the following day.

Tesla’s Chief Executive Officer Elon Musk’s visit to China over the weekend led to an increase in the company’s market value by approximately $82 billion on Monday, but some of those gains were given back on Tuesday. This surge in market value came after Musk reportedly received tentative approval from the Chinese authorities to offer full self-driving (FSD) features in China.

According to a report by Bloomberg, analysts led by Chris McNally from Evercore stated in a report on Tuesday that receiving tentative approval for FSD in Beijing was just a minor positive development for Tesla. This is because obtaining regulatory approval in China is challenging, and the timing was somewhat unexpected.

McNally pointed out that the impact may not be significant in the long run. He explained that Tesla may only be able to charge a monthly fee of $50 for its FSD in China to remain competitive with products from Chinese electric vehicle companies like Xiaopeng Motors, NIO, and Zeekr, a subsidiary of Geely.

Analysts at Bernstein also voiced similar concerns, noting that companies like Huawei, Xiaopeng Motors, NIO, and Li Auto already offer similar features to Tesla, and these features are often provided for free.

Tesla’s stock price dropped by 5.55% on Tuesday, with a year-to-date decline of over 25%.

Bernstein analyst Toni Sacconaghi mentioned in a report, “We believe that FSD is unlikely to drive substantial growth in Chinese car volumes and revenue growth in the near term is also limited.”

Analysts at Bank of America, led by John Murphy, discussed various potential outcomes of Tesla offering FSD in China. In a client note, they mentioned that the product could either generate revenue exceeding $2 billion by 2030 or result in no significant revenue at all.

“Given the competitive nature of the automotive industry, particularly in China, there is a risk that deploying FSD becomes a necessary feature rather than an incremental product sold to consumers,” Murphy wrote, emphasizing that the beneficiaries would be consumers rather than the company.

DeepRoute.ai, a Chinese startup selling advanced driver assistance system software, co-founder Maxwell Zhou told Reuters that in China, new car models priced over $30,000 must have advanced driver assistance features to remain competitive.

“You need to have a premium driving solution to prove that you own a smart car, not a dumb car,” he said.

Yale Zhang, Managing Director of Shanghai consulting firm Automotive Foresight, stated that Tesla’s promotion of FSD in China will “put pressure on other electric vehicle startups, forcing them to accelerate their research and development.”

When the Chinese government approved Tesla to open a factory in Shanghai in 2018, a similar dynamic was observed in the development of electric vehicles in China.

Zhang expressed that Tesla’s development of autonomous driving cars in China could have a similar impact: “This will be the ‘catfish effect’ of the second half of the game.”