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Elon Musk made an unexpected visit to Beijing on Sunday to meet China’s number two leader, 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 well as Ren Hongbin, chair of the China Council for the Promotion of International Trade, a commerce ministry group, according to Chinese state media.
China’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. Li was the Communist party boss in Shanghai in 2018 when Musk decided to invest in the eastern Chinese city.
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 the Tesla chief abruptly cancelled a trip to India, where he had been expected to meet prime minister Narendra Modi, as the group explores starting production in the country.
Tesla’s share price has fallen by almost a third so far in 2023, as it has lost ground in China to local rivals and grappled 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 was 7.5 per cent, far behind the 33 per cent notched up BYD, the Warren Buffett-backed Chinese EV manufacturer.
Tesla’s performance in China contributed to a worse than expected fall 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, as he pushes towards using its vehicles around the world in a so-called robotaxi service.
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.
