When Elon Musk initially established Tesla’s factory in China, he seemed to have the advantage. He built relationships with top leaders, influenced policy changes that favored Tesla, and acclimated workers to longer hours and fewer protections after facing labor condition issues at his California plant. This move helped Tesla become the most valuable car company globally and made Mr. Musk extremely wealthy.
However, Tesla is currently facing challenges as Mr. Musk inadvertently created competition from Chinese electric vehicle manufacturers, which are gaining market share and raising security concerns for the US and Europe.
Tesla leveraged a Chinese policy it played a role in shaping.
In California, Tesla benefited from an emissions mandate that allowed them to sell credits to automakers unable to meet pollution targets, generating billions in revenue.
As Mr. Musk turned his attention to China, his lobbyists advocated for a similar policy. Correspondence and documents obtained revealed collaboration with California environmentalists to encourage China to adopt this policy. Beijing implemented the policy in 2017, and Tesla earned substantial credits through it after opening its Shanghai factory in 2020.
Mr. Musk’s wealth is closely tied to Tesla’s Shanghai factory.
The Shanghai factory, now Tesla’s largest and most productive, accounts for a significant portion of the company’s global deliveries and profits. Mr. Musk collaborated with a city official, now China’s premier, to secure low-interest loans and favorable ownership rules for Tesla in China.
Mr. Musk’s financial success depends heavily on the Shanghai factory, potentially giving China leverage over him. Despite his claims of separating his businesses, Mr. Musk’s positive stance on China and conflicting views on US politicians have raised concerns.
Tesla’s expansion in China has linked Mr. Musk to Beijing.
The reliance on the Shanghai factory may provide China with influence over Mr. Musk, a concern given his involvement in sensitive contracts through SpaceX.
In Shanghai, Mr. Musk could evade American regulations and labor issues, but faced challenges with Chinese labor practices. The Tesla factory in Shanghai played a significant role in advancing the electric vehicle sector in China, introducing new technologies and training a skilled workforce.
Tesla stimulated electric vehicle development in China.
Now, Europe and the US are striving to catch up with China’s lead in electric vehicles. Tesla faces increasing competition from Chinese rivals, with BYD surpassing them in sales. Mr. Musk warned of the potential impact of this competition on other global car companies without trade barriers.
