Yahoo Finance Elon Musk makes surprise visit to China as Tesla battles electric car slowdown
Elon Musk has jetted into Beijing for a surprise visit as Tesla grapples with a global slowdown in electric car sales and cutthroat competition from cheaper Chinese rivals.
The billionaire chief executive on Sunday met with premier Li Qiang, China’s premier and second-most powerful politician, in a reported effort to unlock his company’s bid to deploy fully driverless car technology.
Analysts framed Mr Musk’s move as an attempt to secure a “game changer” for his company as it faces a series of seemingly existential challenges that have dragged its share price down by a third already this year.
It came just days after Tesla reported a fall in first quarter sales and profits amid a cooling of demand for electric cars around the world.
The US company is also being squeezed in China – its second biggest market – by domestic champions such as BYD which are engaged in a brutal price war.
This challenge was underlined over the weekend as those same rivals lined up to show off a raft of new electric car models at the annual Beijing auto show, which opened on Thursday.
Tesla itself was absent from the show – having no new models to unveil – but has vowed to bring forward “more affordable” cars next year.
The company has a major factory in Shanghai, where it produces cars for sale both in China and in export markets such as Europe, but saw its Chinese market share fall from 10.5pc to 6.7pc during the course of 2023.
Against that backdrop it further slashed prices in China last week, cutting the cost of the Model 3 to 231,900 yuan (£25,850) and the Model Y to 249,900 yuan.
Mr Musk arrived at his meeting with Mr Li in a black Tesla Model X and was greeted by Ren Hongbin, a government official who heads the China Council for the Promotion of International Trade.
No details of what the pair discussed were made public. However, footage released by China’s state broadcaster showed the premier hailing Tesla as a “successful example of Sino-American economic and trade cooperation”.
Mr Musk is reportedly seeking permission to move driving data collected by his company in China out of the country so it can be processed in the US, where Tesla keeps its most sensitive and cutting-edge autonomous driving technology.
This would allow Tesla to better train its “autopilot” driverless car software, potentially meaning it could deploy the “full self-driving” version for use in China.
At the moment Chinese laws forbid domestic data being transferred out of the country and full self-driving autopilot has not been enabled there.
Removing this barrier is seen as a vital step for Tesla, given China is the company’s second-biggest market, and that it is being outflanked by Chinese rivals that have already rolled out their own competitor softwares.
Dan Ives, an analyst at Wedbush Securities, said: “If Musk is able to obtain approval from Beijing to transfer data collected in China abroad this would be a game changer.
“We also believe this trip will be significant for Tesla and Musk, further strengthening its EV footprint within the Chinese market at a pivotal time.”
On his way into the meeting on Sunday, Mr Musk was overheard telling journalists: “It’s good to see electric vehicles making progress in China. All cars will be electric in future.”
He later tweeted a picture of himself and Mr Li with the caption: “Honored to meet with Premier Li Qiang.
“We have known each other now for many years, since early Shanghai days.”
The post is a reference to Mr Li’s previous role in helping Tesla secure permission for its first Chinese factory in Shanghai, its first outside the US, back in 2018.
The Chinese politician, who is now the second-most senior member of the country’s Politburo leadership committee, was previously the communist party’s secretary in Shanghai from 2017 to 2022.
