Elon Musk’s Unusual Relationship with China: A Deep Dive into Tesla’s Success and Struggles
When Elon Musk unveiled the first Chinese-made Teslas in Shanghai in 2020, he surprised everyone by going off script and starting to dance. This moment marked a significant milestone for Tesla, as the company had bet on China when it was on the brink of failure. China offered cheap parts and capable workers, while Tesla needed a foothold in the world’s largest electric vehicle market.
Mr. Musk’s gamble paid off, with Tesla’s factory in Shanghai becoming a flagship location that accounted for over half of the company’s global deliveries and profits. However, as Tesla’s success in China grew, so did its challenges. The company started losing its edge over Chinese competitors, and Mr. Musk found himself increasingly tethered to Beijing in ways that drew scrutiny from U.S. policymakers.
Interviews with former Tesla employees, diplomats, and policymakers shed light on how Mr. Musk built a symbiotic relationship with Beijing, benefiting from the Chinese government’s support while reaping subsidies in the United States. Tesla’s success in China was not just due to its innovative products but also the favorable policies it lobbied for and received from the Chinese government.
One key policy change that benefited Tesla was the national emissions regulations, which were influenced by Tesla’s lobbying efforts. This change directly contributed to Tesla’s profits as production in China took off. Mr. Musk also gained unprecedented access to senior Chinese leaders, working closely with top officials to fast-track the construction of the Shanghai factory.
Despite Tesla’s success in China, the company faced challenges related to worker safety and labor practices. Reports of long hours and safety gaps at the Shanghai plant raised concerns, especially after a worker was crushed to death. These incidents highlighted the differences in labor standards between China and the U.S., where Tesla has faced regulatory scrutiny.
As Tesla’s success in China grew, it also spurred innovation among Chinese automakers, threatening established carmakers in Europe and the U.S. China’s push for electric vehicles has transformed the automotive industry, with homegrown brands like BYD and SAIC expanding globally.
Mr. Musk’s deep ties to China have raised questions about his other ventures, including SpaceX and X, a social media platform. Lawmakers are examining his financial exposure to China and how it impacts his various businesses. The complex relationship between Mr. Musk, Tesla, and China underscores the challenges and opportunities of operating in the world’s largest market.
As Tesla navigates the evolving landscape of the electric vehicle industry, its success in China serves as a case study for how foreign companies can thrive in a competitive market while facing regulatory, political, and ethical challenges. The story of Tesla’s journey in China is a testament to the complexities of global business and the delicate balance between innovation, regulation, and geopolitics.
