Musk takes right road with talks in Beijing
- US Tesla chief, who continues to respect Chinese makers of electric vehicles, not only met Premier Li Qiang but also came away with some good news
A price war among China’s electric vehicle (EV) makers, including Tesla, is set to escalate as key players aim for market share over profits. The fierce contest to produce technically advanced and economically competitive vehicles does not quite fit the picture of “overcapacity” as painted by US Treasury chief Janet Yellen during her recent visit.
Another American visitor, Tesla’s founder and CEO Elon Musk, may offer more evidence of the true state of the EV industry in China, which is now rapidly expanding overseas and is, as expected, encountering resistance from the United States to the European Union. Musk unexpectedly detoured to China after abruptly cancelling his planned visit to India, where a US$2 billion gigafactory to assemble EVs for the world’s most populous nation is in limbo.
The Beijing trip was notable in that it was the second year running that the leading US EV manufacturer skipped the trade show for the world’s largest automotive market. Domestic EV brands were on display including smartphone maker Xiaomi, which has emerged as a serious player with its SU7.
The success would explain Musk’s new-found respect for his Chinese competitors.
But Musk did something far more important than showing off cars: he met Premier Li Qiang. The meeting was a signal to the world that China remains committed to nurturing a business-friendly environment for investors to succeed.
After all, Li made it possible for Tesla to open the first and only wholly foreign-owned car factory in Shanghai while he was the city’s party secretary.
Beijing made sure Musk did not leave empty-handed. It recently announced that Tesla vehicles had passed compliance tests with China’s data security rules.
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This means its popular cars – still the second bestselling EV brand in China – will no longer face entry bans at government buildings and structures near military bases. Tesla’s shares closed 15 per cent higher in New York on the back of Musk’s Beijing visit, adding about US$10.6 billion to the value of his holdings.
The relaxation also may be a goodwill message to London and Washington, as politicians in both places claim Chinese EVs may compromise customer data. Beijing seems to be saying it is ready to play fair, perhaps hoping its Western critics will as well.
