Tesla CEO Elon Musk received a series of preferential treatments after a whirlwind visit to Beijing and meeting with Chinese Premier Li Keqiang. Experts warn that it is pitiful for foreign companies to fall into the trap of the Communist Party, and if they get deeper, they may be swallowed up. The Chinese strategy is just using Tesla as bait, positioning it as a battleground in the competition between China and the United States.
Musk abruptly canceled a meeting with Indian Prime Minister Narendra Modi in early April and visited Beijing last Sunday to meet with Premier Li Keqiang. That evening, the China Association of Automobile Manufacturers announced that Tesla’s vehicles produced in Shanghai meet safety requirements. Among the car manufacturers under review, Tesla is the only foreign company.
Tesla stated that restrictions on the use and parking of Tesla and other intelligent connected vehicles have been gradually lifted in various regions.
According to Reuters, Musk’s visit to Beijing was to discuss launching the Full Self-Driving (FSD) software in China and to seek approval to transfer data collected in China to overseas to train its autonomous driving algorithm.
Bloomberg reported that Tesla will collaborate with Chinese tech giant Baidu to develop mapping and navigation functions to deploy full self-driving capabilities in the Chinese market.
Following his meeting with Li Keqiang, Tesla’s stock price surged 15.31% to $194.05 per share on Monday.
Musk posted on Twitter, stating, “The company will continue to deepen its roots in China.”
However, Wall Street has previously classified China as “not investable.” In a report by the Financial Times in March, at a China stock conference hosted by Goldman Sachs, over 40% of respondents believed that China was “not investable.” Timothy Moy from Goldman Sachs said, “Almost all global investors we have contacted have basically withdrawn from China.”
Regarding Musk’s statements, Su Ziyun, the director of the Institute of Strategy and Resources at the Taiwan Institute for National Defense and Security Research, believes that Musk is essentially seeking survival because he is the biggest victim himself. He believes that falling into the trap of the Communist Party is quite pitiful for an entrepreneur who focuses on innovation.
Tesla established a factory in Shanghai in 2018, receiving various benefits from the Chinese Communist Party that other foreign companies couldn’t get, including tax incentives, low-interest loans, and permission to build solely-owned factories. Tesla’s success has also driven the development of other electric vehicle manufacturers in China.
However, in March 2021, Tesla China faced scrutiny over the security of its automotive data and was restricted from access to various government departments, party organs, key state-owned enterprises, and military facilities.
By 2024, Tesla’s first-quarter financial report showed a 9% decline in revenue compared to the previous year and a 55% drop in profits. Global delivery numbers were significantly lower than Wall Street’s expectations at 386,800 vehicles, an 8.3% year-on-year decrease and a substantial 20.1% quarter-on-quarter decline.
Following the financial report, Tesla’s stock price briefly dropped to a low of $142.50. Its market value plummeted over 40%. Musk also announced earlier this month a 10% global workforce reduction.
Su Ziyun pointed out that Tesla repeated the painful experiences of Taiwanese businesses. The so-called “Luring-Feeding-Killing” trap involves luring foreign companies into China, allowing the Communist Party to steal technology from these companies through espionage and other means, promoting the development of Chinese companies, and eventually pushing foreign companies out of the Chinese market to compete globally.
Now, the Chinese government is tempting Tesla with another bait: allowing the operation of fully autonomous driving in China. If Chinese automotive companies can steal technology from Tesla’s self-developed self-driving system, the future prospects for Tesla are clear – it will likely be completely exploited by the Chinese.
However, Su Ziyun also analyzed that Musk is looking for an escape plan, as he is planning to produce affordable electric vehicles and may consider relocating to India in the future.
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Sydney University Associate Professor Feng Chongyi also analyzed for Dajiyuan that Musk sees the Chinese market as an opportunity, while the Chinese Communist Party sees his technology as valuable. This transaction represents cooperation between authoritarian regimes and Western capitalist consortia, a relationship that has existed for a long time.
It is the fundamental policy of the Chinese Communist Party to exchange market access for technology. Feng Chongyi explained that all industries in China are under the control of the CCP, determining who can enter or not. This system is different from the free markets in the West.
Many foreign analysis companies were searched or investigated by Chinese national security personnel last year. In this situation, China is no longer a safe operating environment for foreign businesses. Due to the U.S.-China trade war and technology war, more foreign companies are choosing Southeast Asia, India, or even South America as new production bases.
Feng Chongyi further expressed that the CCP does not adhere to international laws or norms but prefers the promises of individual political figures. They can overturn these promises at any time and are habitual liars. Therefore, the risks associated with the promises made by Li Keqiang or the Chinese government to Musk are significant.
In terms of Tesla’s autonomous driving technology, Su Ziyun pointed out that such technology has been used for military purposes for a long time. For example, autonomous guided missiles have been in existence for decades. The application of rapid image processing and settlements in business can also translate to military use, making it a dual-use technology.
If Tesla continues to operate in China with concerns about technology leakage, the United States may further restrict the output of Tesla’s technology. Tesla is becoming a battleground in the competition between digital democracies and digital authoritarian regimes.