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Elon Musk, the eccentric American entrepreneur, has become China’s favourite non-Chinese citizen. Recently, he visited the country for the first time since 2020 and immediately met with Foreign Minister Qin Gang. Foreign capitalists have doubts about China’s investability, but Musk’s presence has paid dividends.
His choice to build the world’s largest Tesla factory in Shanghai, back in 2019, was a fundamental strategic move for the country’s electric-vehicle (EV) supply chain. The enormous factory is capable of producing over 750,000 EVs annually – more than 10% of the country’s total new energy-vehicle sales in 2022.
Elon Musk met China's foreign minister, Qin Gang, today in Beijing. ?? pic.twitter.com/9LS5uJpyxQ
— DogeDesigner (@cb_doge) May 30, 2023
The numerous suppliers that have mushroomed to serve the ‘Gigafactory’ now provide components to homegrown EVs, enabling China to overtake Japan and become the largest automobile exporter worldwide. Although Tesla’s market share has been diluted by competition, its sales in China have consistently soared at triple-digit rates.
In 2022, Tesla’s sales have already touched $18 billion, compared to $3 billion in 2019 – a whopping 22% of the company’s total revenue. Musk’s Twitter account, which he purchased for $44 billion, previously flagged Chinese state-affiliated media. However, this acquisition does not seem to have affected Tesla’s position in China. In fact, it is likely to have helped. Since Musk owns the company, he can halt flagging certain media; hence, attempts to silence opposition party critics inside countries like India and Turkey have been successful.
Musk has cleverly optimised this opportunity to push his company’s interests further, and that has the Chinese Communist Party (CCP) in agreement. The automaker’s success is vital as CCP is attempting to battle the narrative that investing in the People’s Republic has become too risky. The United States and China share ‘inseparable’ interests, according to Musk. Moreover, he repeatedly opposes decoupling. This has emerged as a positive precedent for CCP. Finally, Tesla’s Model Y is one of its top-selling vehicles, thanks to China’s appetite for it.
If was a successful trip to China for Elon Musk & Tesla. China’s future is much brighter with Elon Musk pushing the charge and I believe a juicy announcement will be coming soon. ???? @elonmusk $TSLA pic.twitter.com/ANxHck0gB2
— Teslaconomics (@Teslaconomics) May 31, 2023
Tesla’s success in China has provided the company with good political cover, and the fact that Beijing is pleased with the rewards bears testimony to the same. However, there are potential risks associated with Musk’s relationship with Beijing. Tesla’s involvement with CCP could cause issues in Washington, as Musk’s SpaceX venture has government contracts. For now, though, it seems as if Beijing and Musk are getting all that they want out of the agreement, so this association is likely to go on.
