Tech mogul Elon Musk was seen at the Tesla manufacturing plant in Shanghai in 2019. Amidst his active involvement in shaking up the U.S. government with substantial changes as the federal workforce is reduced under the Trump administration, one of the companies instrumental in his wealth accumulation has marked a significant achievement in China.
Tesla, the electric vehicle manufacturer led by Musk, now operates two facilities in Shanghai. Complementing the nearby Gigafactory, which serves as Tesla’s inaugural production hub outside of the United States, the recent opening of the $200 million Megapack battery plant is vital to Musk’s ongoing success in both China and globally.
The Gigafactory is responsible for producing half of all Teslas worldwide, equating to approximately 1 million vehicles annually. While fulfilling demands in the Chinese market, the factory also ships cars to Europe and other Asian regions, excluding the U.S. which has yet to receive exports.
Musk’s vehicles have been acknowledged for bolstering China’s position as a leader in the electric vehicle sector, thereby making China Tesla’s largest market outside of the U.S.
Michael Dunne, CEO of Dunne Insights based in San Diego, emphasized the pivotal role of China in Tesla’s global triumph, stating, “China is absolutely central to the success story of Tesla globally. Take China out of the picture, we have a completely different Tesla.”
However, Musk’s notable influence extends beyond his business endeavors, as he has gained considerable leverage within the U.S. government through his Department of Government Efficiency (DOGE), all while maintaining substantial interests in China, viewed as a primary strategic rival by the U.S.
Despite being perceived favorably as an innovator and entrepreneur in China, Musk’s standing could abruptly shift if tensions between the U.S. and China escalate, potentially tying him more closely to policies enacted during the Trump administration.
Efforts to reach Musk, the White House, DOGE, and Tesla for comment went unanswered. The White House maintains that Musk’s cost-cutting actions are unrelated to foreign policy, while the Chinese Embassy in Washington emphasizes the business community’s role in fostering stable U.S.-China relations.
The establishment of the Gigafactory in January 2019 marked a milestone for Tesla, as it became the first foreign automaker to establish a factory in China without a local partner. The factory commenced operations just ten months later, showcasing what locals refer to as “China speed.”
Currently, China accounts for over a third of Tesla’s global sales, with more than 657,000 vehicles sold in the country last year alone. By June, Tesla had established 520 stores nationwide, underscoring the nation’s significance as a key market for the company.
In January, a revised version of Tesla’s Model Y was launched in the China market before its release in the U.S. Experts suggest that Musk requires support from the Chinese government to sustain his business successfully. Understanding the authority of Chinese regulators can be challenging for those who have not experienced it firsthand. Unlike in the United States or Europe where obtaining a license is a straightforward process, securing permits or licenses in China involves extensive negotiations.
Facing increased competition from Chinese electric vehicle manufacturers, Tesla introduced a software update last month to mimic its full self-driving features available in the U.S. However, Tesla’s Full Self-Driving (FSD) software is still pending approval in China. Maintaining a favorable relationship with Beijing is crucial for Musk, particularly amidst criticisms faced by his companies in the U.S., Europe, and elsewhere.
The possibility of Beijing imposing bans or investigations on Tesla underscores the importance of Musk staying in the government’s good graces. Despite Musk’s outspoken nature regarding politics in various countries, he has been notably reserved when it comes to China. Musk’s reluctance to criticize China or the ruling party has been observed by analysts.
His opposition to U.S. tariffs on Chinese electric vehicles, shift in stance on the issue, and favorable remarks about China’s stance on Taiwan have garnered attention. Some view Musk’s relationship with the Chinese government as potentially beneficial for U.S.-China relations, while others see it as a risk, including U.S. lawmakers who caution against Beijing leveraging Musk for their advantage.
Elon Musk’s interactions with China have drawn mixed reactions, with some praising his approach for potential diplomatic benefits, while others express concerns about undue influence on policy decisions.
According to friendly sources in China like Secretary of State Marco Rubio and national security adviser Mike Waltz, Congressman Krishnamoorthi expressed his hope that the president would attentively consider the perspectives of all individuals. Even within Musk’s Chinese workforce, there are concerns about his increasing involvement in Washington. “As a businessman, he should prioritize business matters,” mentioned a Tesla factory worker in Shanghai who opted to remain anonymous for safety reasons. “Government affairs should be managed by experts.” This report was compiled by Eunice Yoon in Shanghai and Jennifer Jett in Hong Kong.
