China Was Tesla's Savior. It's Becoming Its Thorn

The 'NYT' looks at Elon Musk's relationship with Beijing
By Kate Seamons,  Newser Staff
Posted Mar 31, 2024 5:00 PM CDT
China Was Tesla's Savior. It's Becoming Its Thorn
Tesla and SpaceX's CEO Elon Musk looks on, during an in-conversation event with Britain's Prime Minister Rishi Sunak at Lancaster House in London, Thursday, Nov. 2, 2023.   (AP Photo/Kirsty Wigglesworth, Pool, File)

Elon Musk has China to thank for much of Tesla's success. But as the New York Times reports, Beijing's helping hand could end up being more of a slap. Interviews with former Tesla employees, diplomats, and policymakers shed light on how Tesla's "unusually symbiotic relationship" with China came to be, write Mara Hvistendahl, Jack Ewing, and John Liu. Musk had realized Tesla needed China's cheap parts and labor, and a Shanghai plant was the solution. The facility has become a linchpin for the company, pumping out more than half of Tesla's global deliveries and "the bulk of its profits." And at the start, Musk did have "the upper hand in the relationship," as evidenced by what he was able to obtain.

That plant was built with no local partner; a change to national emissions regulations Tesla lobbied for would benefit it to the tune of hundreds of millions of dollars. But now the flip side of the coin is being revealed, Hvistendahl, Ewing, and Liu argue. Chinese companies have had to innovate to keep up, and Xi Jinping's quest to make China an automotive power is gaining steam, with "cheap but well-made electric cars" by the likes of BYD and SAIC edging in on established global brands. "Musk is now treading a fine line": In January he warned that absent trade barriers, Chinese companies would obliterate the rest. And yet "he remains reliant on the Chinese market and supply chain" and could not "easily extricate himself" if he wanted to—even as US lawmakers begin to probe his ties to the country. (Read their in-depth piece in full here.)

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