Elon Musk's cancelled India trip contrasts with Tesla's growing presence and high-level relationships in China.
REUTERS/Aly Song
Elon Musk's two-day trip to Beijing looks like a mutually-beneficial win for Tesla and for China — and a snub for India.
The tech billionaire made his second trip to China in less than a year. He left on Monday after meeting with senior officials including Premier Li Qiang, China's second-highest-ranking politician, to discuss the rollout of Tesla's Full Self-Driving technology in the world's biggest auto market.
China's search engine giant Baidu agreed to grant Tesla access to its mapping license so Tesla can collect data on China's roads, Reuters reported. And Tesla's vehicles cleared a key hurdle with a Chinese data security regulator on Monday.
That's a big step for Tesla toward launching FSD in the country, a potential revenue booster just as the company wraps up one of its most tumultuous months. Tesla's stock is down 23% year to date.
In April, Tesla reported disappointing first-quarter deliveries, went through a messy 10% global layoff, recalled nearly 4,000 Cybertrucks because of faulty accelerators, and cut prices — a move reciprocated by Chinese EV rivals, who cut theirs even further.
Tesla has 1.6 million cars in China, representing a huge potential market for FSD. Other carmakers could also pay to license the technology.
Wedbush analyst Dan Ives told the Financial Times that the FSD approval in China was a "watershed moment" for Tesla. The company's huge valuation — hundreds of billions of dollars more than other automakers — hinges on autonomous technology, Ives said.
Local regulators may keep a particularly close eye on Tesla's software. In January, the company had to recall all of its cars in China made from 2014 to 2023 to fix problems with its Autopilot feature and locks. Both problems could be fixed with a free software update.
Musk has long been eager to make nice with China, sometimes with antics that would raise eyebrows for other CEOs.
To celebrate a new Shanghai factory in 2020, he performed what a BI reporter at the time deemed a "dad-dance striptease." On the hundredth anniversary of the Communist Party in 2021, he tweeted fawning praise of the country.
China, for its part, has given him a royal welcome on past trips. His May 2023 trip included a 16-course meal with a battery executive and a storm of local social media praise.
As Tesla expands in China, the country must balance its desire to work with the US juggernaut with its inclination to protect local giants, like BYD. In the first quarter, Chinese automakers' profit jumped 32% from a year ago, per statistics released Saturday.
Musk needs China — but China also needs Musk, as a sign that the country is open for business with high-profile US companies.
Trade tensions between China and the US have ratcheted up in the last year amid US concerns about Chinese manufacturing and data security.
Janet Yellen, the US treasury secretary, and Antony Blinken, the secretary of state, visited China in the past month. They warned of Chinese companies undercutting other manufacturers through overproduction, including in electric vehicle and battery production.
China has ramped up EV production, a major threat to Tesla. BYD beat Tesla as the best-selling EV maker last year, and Musk said in January that Chinese EVs would "pretty much demolish" other American carmakers if allowed to enter the US.
Tesla's work in China may help the country court foreign investment. Businesses have been scared off by government crackdowns — including raids on top global firms like Bain — and by roiling property and stock markets. This year, weakened consumer demand has hit companies from Gucci to Apple, which have built big businesses as Chinese consumers' disposable income has risen.
While Musk made time for this quick trip to Beijing, he skipped a planned trip to India earlier this month to meet Prime Minister Narendra Modi. Musk's visit was going to include an announcement about Tesla entering India, Reuters reported.
"Unfortunately, very heavy Tesla obligations require that the visit to India be delayed, but I do very much look forward to visiting later this year," Musk posted on X.
A key Tesla executive who was helping to lead the company's entrance into India left this month, Reuters reported.
Musk's India visit would have been a win for Modi, who is seeking to boost India's status as a manufacturing hub, especially as businesses leave China.
