$Tesla (TSLA.US)$CEO Elon Musk made an unexpected visit to China on Sunday. An analyst who has been watching Tesla for a long time said that this visit may be related to Tesla's launch of fully automated driving (FSD) software in China.

Notably, Musk was scheduled to visit India last Monday and meet with Indian Prime Minister Narendra Modi to announce Tesla's plans in India. However, the billionaire cancelled the visit in the last hour, citing Tesla's troubled affairs.

Daniel Ives (Daniel Ives), an analyst at Wade Bush Securities, said Musk's visit to China “focused on 'cutting the ribbon' for the launch of the long-awaited FSD software and permissions/approvals to transfer data overseas.”

The analyst called the visit a “watershed moment” for Tesla. He said, “Tesla's long-term valuation story depends on FSD and autonomous driving, and one key piece missing in this puzzle is Tesla providing FSD in China, which now seems to be just around the corner.”

He pointed out that since 2021, the data collected by Tesla's Chinese fleet has been stored in Shanghai.

Ives said, “If Musk can get approval, the data collected in China will be transferred abroad, which will 'change the rules of the game' and speed up its training algorithms for autonomous driving technology on a global scale.”

He added that this visit is also significant for Tesla and Musk to further strengthen their electric vehicle business in the Chinese market at a critical moment.

Ives said, “Despite Tesla's demand challenges in China, Wall Street is going through this painful transition period to find Musk's long-term growth story, and FSD is a key factor in the recipe for success.”

Ives maintains a “outperforming the market” rating for Tesla stock and a target price of $275.

Editor/Jeffrey