Elon Musk flies in to meet China’s premier as Tesla fights local rivals

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Elon Musk made an unexpected visit to Beijing on Sunday to meet China’s number two official, the premier Li Qiang, as Tesla contends with declining sales and data security concerns in the world’s biggest car market.

Musk landed in the Chinese capital on Sunday afternoon and met Li, as the electric vehicle maker’s chief sought to overcome recent setbacks — including in China — by refocusing Tesla on artificial intelligence with a planned “robotaxi” service.

China, Tesla’s second-biggest market after the US, is particularly significant, since sales have been sliding this year and Musk’s ambitions to boost Tesla’s appeal with new autonomous driving capabilities have been curtailed owing to Chinese restrictions on the use of customer data.

The country’s national broadcaster reported that Li described Tesla’s business in the country as a “successful example” of economic and trade co-operation with the US — emollient language at a time when trade tensions between Beijing and Washington have increased, particularly over technology.

State media also reported that Musk said Tesla wanted to deepen its co-operation with China and praised its Shanghai facility as its best-performing factory.

“Honoured to meet with Premier Li Qiang,” Musk said in a post on X, his social media platform. “We have known each other now for many years, since early Shanghai days.”

Li was the Communist party boss in Shanghai in 2018 when Musk decided to invest in the eastern Chinese city.

The Tesla chief also met Ren Hongbin, chair of the China Council for the Promotion of International Trade, a commerce ministry group, according to Chinese state media.

No further details of the meetings were available and Tesla did not immediately respond to questions.

The visit came little more than a week after Musk abruptly cancelled a trip to India, where he had been expected to meet Prime Minister Narendra Modi, as the group explored starting production in the country.

Tesla’s share price has fallen by almost a third so far in 2024, as it has lost ground to local rivals in China, the world’s biggest car market by units. At the same time it is grappling with a global slowdown in EV sales growth that has forced it to cut thousands of jobs.

The group’s Chinese sales fell 4 per cent year on year in the first quarter, to 132,420 cars, according to data from Automobility, a Shanghai consultancy, even as total production of new energy vehicles — a category that includes hybrids — rose 32 per cent.

The figures indicate that Tesla’s local market share in the sector is 7.5 per cent, far behind the 33 per cent notched up by BYD, the Warren Buffett-backed Chinese EV manufacturer.

Tesla’s performance in China contributed to a worse than expected drop in first-quarter profits, as Musk pledged to bring forward the launch of “more affordable” models.

On an earnings call last week he said Tesla was hoping to obtain regulatory approval for more autonomous driving capabilities in China.

However, the group’s ambitions to roll out more advanced self-driving technology in China are complicated by requirements to store locally the user data needed to improve its systems, which are largely developed in the US.

The powerful Cyber Administration of China has raised concerns about Tesla’s data collection in the past.

The world’s second-biggest economy is Tesla’s biggest market outside the US and a vital part of the supply chain for its electric vehicles.

Musk’s decision to build a multibillion-dollar gigafactory in Shanghai is credited with helping to spearhead the rapid growth of China’s EV industry.

But Tesla’s recent loss of market share in the country comes after a decision to slash prices in China in late 2022 sparked a price war that has driven intense competition in the domestic auto market. The group has also released new models more slowly than its competitors.

Beyond BYD, which has rivalled Tesla as the world’s biggest EV producer and is currently only just behind in terms of units sold globally, Musk also faces emerging competition from Chinese tech groups such as Huawei and Xiaomi, which are increasing bets on EVs.

Analysts have also warned that Musk’s business in China could be vulnerable to geopolitical retaliation from Beijing’s security hawks.

X, the Musk-owned social media platform formerly known as Twitter, is banned in China. Officials have also expressed concerns about ties between SpaceX, Musk’s commercial rocket and satellite business, and the US military.

This story has been amended to correctly attribute the fall in Tesla’s share price to this year

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