Elon Musk, the billionaire, traveled a surprise visit to China to successfully appoint the Chinese government to approve the automatic driving characteristics of his Tesla electric vehicles ( EV ).
On Sunday, Musk posted a picture on X, the social media platform he owns, of himself meeting with Taiwanese Premier Li Qiang, whom he described as an old companion:
honored to join Premier Li Qiang.
Since the beginning of Shanghai, we have known one another for several years. photograph. twitter.com/JCnv6MbZ6W
— Elon Musk ( @elonmusk ) April 28, 2024
When he designs himself as a keeper of free speech, Musk took a lot of teasing in the responses to his blog for having such a flirty partnership with one of the most authoritarian and illiberal regimes in the world. His visit to China was clear and had no bearing on freedom of expression: he wanted Tesla to be one of the first companies to receive formal approval for its Internet-enabled autonomous driving capabilities.
The China Association of Automobile Manufacturers ( CAAM ), a fusion of government regulators and industry leaders who serves as an advisory and certification body for automobiles, is a fusion of China’s two entities. CAAM, which has been around for a long time, was most just given the task of checking Internet-connected cars for compliance with China’s data protection legislation.
In large part, this certification is a dog-and-a-powd show for international political consumption because hesitant foreign governments view Chinese bright cars as moving detective machines that you send vast amounts of data to Taiwanese military intelligence for analysis. The Beijing-based government decided to stage a major show to “certify” its cars as safe bastions of perfect privacy after seeing how this fear was impacting its overseas sales of cars.
Additionally, CAAM was required to examine international vehicles, and because Teslas have cameras that record both the cockpit and the entire surrounding space, Musk clearly felt it was necessary to travel to China for a conference with his former friend Li Qiang to assure Teslas received CAAM’s approval.
Beijing has long been wary of the dangers Tesla cars pose to its own security, according to The South China Morning Post (SCMP ). China is still the second-largest market for Musk’s EVs, but there is also some consumer opposition:
After a lady wearing a T-shirt with the terms “brake damage” and a Tesla brand jumped on top of a Tesla vehicles on display at the Shanghai Auto Show to raise awareness of a collision involving her Model 3 she blamed on the business, the firm faced a social media backlash from Chinese buyers in April of 2021. After being pressured by the market regulator, Tesla later made the owner of the specific Model 3’s data log available.
According to those with knowledge of the situation, the US carmaker did not attend the Shanghai car show last year and is now not participating in the Auto China Show in Beijing, which started last Thursday due to concerns about similar incidents.
Since 2021, Beijing has restricted Tesla use to military personnel and employees of important state-owned companies due to security concerns. Additionally, it is forbidden to use the Chinese-made Model 3s and Model Ys in some locations, including airports.
CAAM gave Tesla its seal of approval for data privacy, and, following Musk’s visit to Beijing, Chinese web search giant Baidu announced a deal to provide mapping and navigation data for Tesla’s full self- driving ( FSD ) system. Without the consent of the Chinese Communist Party, which firmly controls Internet navigational data, no such deal would have been possible.
( Jakub Porzycki/NurPhoto via Getty Images )
Shanghai Mingliang Auto Service CEO Chen Jinzhu told the SCMP that the Baidu deal and CAAM’s seal of approval will give Tesla customers more” confidence in driving them on the streets of China.”
” Since the CAAM is a government- backed auto industry association, the review certainly will have an influence on relevant authorities ‘ policymaking”, said Chen.
Tesla Vice President of External Relations Grace Tao was given permission to write an op-ed for the state-run People’s Daily,  , in which she praised FSD and other automatic driving systems as essential to the future of electric vehicles, adding to that sense of regime approval.
Other Chinese state media outlets gleefully used Musk’s visit as propaganda. As it does whenever American business leaders meet with Chinese officials, the state- run Global Times framed Musk’s visit as a repudiation of U. S. criticism of China’s trade practices, particularly the current controversy about “overcapacity”.
When Treasury Secretary Janet Yellen visited Beijing in early April, overcapacity was a hot topic of conversation. The worry is that China’s heavily subsidized industries have amassed sizable inventories of cheap goods in an effort to slash their manufacturing bases. China can export these products to other nations.
In the case of EVs, China clearly has the power to wipe out the American EV industry, which has been lavishly underwritten by U. S. taxpayers, but it , cannot produce vehicles that American consumers want to buy.  ,
Due to cheap ( and slave ) labor, a supply of cheap components, and government subsidies that the European Union investigated in 2023 as an anti-competitive racket, China can sell EVs for a fraction of the price that American automakers charge. ” Overcapacity” is an especially hot topic when it comes to EVs because the auto industry, and its unionized workforce, wields so much influence with the government.
On September 11, 2023, BYD electric vehicles are stacked at the international container terminal of Taicang Port in eastern Jiangsu Province of China. ( AFP via Getty Images )
The Global Times claimed that Musk’s trip to China disproved the “overcapacity hype” because Musk clearly believes he can sell a lot of Teslas there, but that should n’t be the case if Chinese companies are over-producing EVs that sell for a third or less of Tesla’s price.
The company praised Musk’s praise for” the hard work and intelligence” of Chinese workers at his Shanghai Gigafactory and a Tesla corporate statement that stated the company would” continue to work hard in China, develop together with the industry in areas like AI, electric vehicles, and energy storage, accelerate the implementation of clean energy and autonomous driving technologies, and turn our beautiful vision into reality.
In contrast to politicians in Washington who constantly hype up anti-China rhetoric, the Global Times wrote in another smug editorial on Sunday that” Chinese analysts said Musk’s visit highlights the importance of the Chinese market to many American companies as they are strengthening ties.”
The Global Times reported that Chinese consumers are now buying more EVs than gasoline-powered vehicles, despite American and European consumers ‘ resistance to EVs.
Tesla stock prices increased by more than 15 % on Monday as a result of Musk’s successful visit to China, giving the company its best day on Wall Street since March 2021. The CAAM endorsement and, more importantly, the Baidu data-sharing agreement clearly led investors to believe that some of China’s restrictions on driving Teslas close to government and military installations might be lifted, which would undoubtedly result in significant increases in Tesla sales in China.
Interestingly, sales dropped sharply in the first quarter of 2024 for BYD, Tesla’s major global rival for EV sales. Up until the startling 43 percent decline in sales at the beginning of 2024, Bye had surpassed Tesla as the world’s top EV seller. In the same time period, Tesla sales decreased by a little more than 20 %.
The EV flip-flop was clearly caused by soft Chinese consumer demand, particularly from low-income car buyers. Since BYD and its Chinese rivals fought hard for the discount end of the market, Tesla outperformed the market as a premium brand with a flashy appeal to wealthy customers when the sputtering Chinese economy caused demand to sag for less expensive cars.
If BYD has a large inventory of vehicles to export at fire-sale prices, this could cause overcapacity to become even more problematic. However, the Chinese company claims it can turn its sales around in 2024, optimistically anticipating a net 20-percent increase in annual units sold by the time 2025 arrives.
