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Elon Musk Meets with Chinese Premier in Beijing, Bolstering Tesla Stock

Billionaire Elon Musk made a surprise visit to China to seek approval from the Chinese government for self-driving features for Tesla electric vehicles (EVs).

On Sunday, Musk posted a photo on his social media platform X of himself meeting Chinese Premier Li Qiang, whom he described as an old friend.

Despite calling himself a champion of free speech, Musk has criticized his posts for having such a friendly relationship with one of the world’s most authoritarian and censorious regimes. His reaction drew a lot of ridicule. The purpose of his visit to China was straightforward and had nothing to do with freedom of expression. He had hoped Tesla would be the first company to receive formal approval for internet-enabled self-driving capabilities.

In China, there is something known as. China Automobile Industry Association (CAAM) is an amalgamation of government regulators and industry leaders with an automotive advisory and certification role. CAAM has been around for decades, most recently tasked with certifying that internet-connected vehicles comply with China’s data security laws.

To a large extent, this recognition is a dog and pony show for global political consumption, as foreign governments are alarmed. to respect China’s smart cars act as rolling spy machines that can collect large amounts of data about both the driver and the surrounding environment and forward that information to China’s military intelligence agencies for analysis. Seeing this concern as having a negative impact on car sales overseas, Beijing’s government decided to make a big show of “certifying” its cars as safe bastions of total privacy.

CAAM also has to analyze foreign cars, and since Tesla cars are packed with cameras that monitor both the cockpit and the surrounding space, Mr. Musk apparently decided to fly to China to meet with his old friend Mr. Li. seems to have felt that it was important. Qiang called for Tesla to receive CAAM approval.

of South China Morning Post (SCMP) I got it. The Chinese government has long been wary of the risk to its national security posed by Tesla cars, and while China remains the No. 2 market for Musk’s EVs, there has also been consumer resistance.

In April 2021, the company suspended a customer in China after a woman wearing a T-shirt emblazoned with the words “Brake Failure” and the Tesla logo jumped on top of a Tesla car on display at the Shanghai Auto Show. faced backlash on social media. She drew attention to an accident involving her Model 3 that she blamed on the company. Tesla later bowed to pressure from market regulators and released certain Model 3 data logs to owners.

The U.S. automaker did not attend last year’s Shanghai auto show and was absent from the Beijing auto show, which opened last Thursday, due to concerns about similar incidents, according to people familiar with the matter.

Since 2021, the Chinese government has restricted the use of Teslas by military personnel and employees of major state-owned enterprises due to security concerns. Chinese-made Model 3 and Model Y vehicles are also prohibited from entering certain areas, including airports.

CAAM granted data privacy clearance to Tesla and also gave approval to Chinese web search giant Baidu following Musk’s visit to Beijing. announced Agreement to provide mapping and navigation data for Tesla’s Full Self-Driving (FSD) system. Such an agreement would not have been possible without the support of the Chinese Communist Party, which tightly controls internet navigation data.

(Jakub Porzycki/NurPhoto, Getty Images)

Chen Jinzhu, CEO of a consulting company called Shanghai Mingliang Automobile Service, said: SCMP CAAM’s seal of approval and Baidu’s agreement will give Tesla customers even more “confidence when driving on China’s roads.”

“As CAAM is a government-backed automotive industry association, this review is certain to influence the policy decisions of relevant authorities,” Chen said.

Adding to the sense of regime approval, Tesla’s vice president of external relations, Grace Tao, was allowed to write an op-ed in a state-run newspaper. People’s Daily, In it, she touted FSD and other self-driving systems as key to the future of electric vehicles.

Other Chinese state media gleefully used Musk’s visit for propaganda purposes.As is always the case when American business leaders meet with Chinese officials, Global Times framed Musk’s visit contradicts US criticism of China’s trade practices, particularly the current controversy over “overcapacity.”

Treasury Secretary Janet Yellen made the topic of excess production a hot topic. visited Beijing in early April. The fear is that heavily subsidized Chinese industries are building up large inventories of cheap products that China could export to other countries in order to crush their manufacturing bases. .

When it comes to EVs, China clearly has the power. wipe out Although the US EV industry has been generously underwritten by US taxpayers, cannot produce Cars that American consumers want to buy.

Thanks to its cheap (and slavering) labor, cheap parts supply, and government subsidies that the European Union investigated as an anti-competitive racket in 2023, China has increased the number of prices charged by U.S. automakers. You can sell EVs at a fraction of the cost. Overcapacity is a particularly hot topic when it comes to EVs, as the auto industry and its unions have significant influence over governments.

On September 11, 2023, BYD electric vehicles are stacked up at the Taicang Port international container terminal in Suzhou Port, eastern China’s Jiangsu Province, waiting to be loaded onto a ship. (AFP, Getty Images)

of Global Times He claimed that Musk’s visit to China disproved the “overcapacity hype,” as Musk clearly believes he can sell Teslas in large numbers in China, but that Chinese companies have That shouldn’t be possible if they’re producing too many EVs that sell for less than a third of the price.

A Chinese Communist Party newspaper reported that Musk praised the “hard work and intelligence” of Chinese employees working at the Shanghai Gigafactory, and that Tesla’s corporate statement said the company “will continue to work hard in China and work with the industry in areas such as AI.” It will continue to develop,” he said. , electric vehicles and energy storage will accelerate the adoption of clean energy and self-driving technologies, turning our beautiful vision into reality. ”

“Chinese analysts say Musk’s visit highlights the importance of the Chinese market to many U.S. companies with whom they are strengthening ties, unlike politicians in Washington who regularly exaggerate anti-China rhetoric. He said that Global Times Said he said in another smug editorial on Sunday.

of Global Times While consumers in the U.S. and Europe have expressed resistance to EVs, Chinese consumers have embraced them, with Chinese consumers reportedly now purchasing EVs over gasoline-powered cars. He pointed out that he was doing so.

Tesla’s stock price rises after Musk’s successful visit to China undulation It rose more than 15% on Monday, giving the company its best day on Wall Street since March 2021. CAAM’s support, and Baidu’s data sharing agreement in particular, clearly led investors to believe that some of China’s regulations on Tesla driving near government and military installations could have an impact. Once this is lifted, Tesla’s sales in China will undoubtedly improve significantly.

What is interesting is the sales Dropped BYD, Tesla’s main global rival in EV sales, will see its performance soar in the first quarter of 2024. BYD had overtaken Tesla as the world’s top EV seller until sales fell 43% in early 2024. Tesla’s sales fell more than 20% in the same period.

The reversal at the top of the EV chart was clearly driven by soft Chinese consumer demand, especially among lower-income car buyers. BYD and its Chinese rivals competed fiercely for the discount end of the market, so when China’s economic downturn sapped demand for cheap cars, Tesla was a premium brand with flashy appeal to affluent customers. I got through it well.

Overcapacity could become more of a problem if BYD has a huge inventory of vehicles to export at fire sale prices, but the Chinese company claims it can turn around sales in 2024. , optimistically predicts a net 20% increase in annual unit sales. It will be on sale by 2025.