Elon Musk was in China for less than 24 hours, he revealed in an X post yesterday (April 28). The Tesla CEO met with Chinese Premier Li Qiang and appeared to have swiftly won the Chinese top official’s backing for Tesla’s FSD (short for “full-self driving”) software to be rolled out in the country. The surprise trip is seen as a desperate move to tap new revenue streams and restore investor confidence as Tesla’s electric vehicle sales continue to slow.
Currently, a less advanced version of Tesla’s driver-assistance program, Autopilot, is available to all drivers, but FSD is not yet available to Chinese customers for data security reasons. Tesla reportedly plans to partner with Chinese technology conglomerate Baidu on data collection, which moves the U.S. electric vehicle company closer to FSD being fully approved in China. Since 2021, Chinese regulators have limited foreign companies from moving data collected domestically across borders, which curtails Tesla’s ability to train its A.I. self-driving systems on Chinese data in order to improve its FSD capabilities, as per Reuters.
Honored to meet with Premier Li Qiang.
We have known each other now for many years, since early Shanghai days. pic.twitter.com/JCnv6MbZ6W
— Elon Musk (@elonmusk) April 28, 2024
Musk has cultivated a strong relationship with the Chinese Premier. Li was pivotal in signing off the opening of Tesla’s Shanghai Gigafactory in 2018, when he served as the Communist Party’s chief in Shanghai. In a bid to attract foreign investment and boost domestic economy, Li offered Tesla generous tax incentives and unprecedentedly allowed the U.S. company to be the sole owner of its manufacturing plant. All other non-Chinese automakers operate in the country through joint ventures with local carmakers. Li described Tesla as a “successful model” for U.S.-China partnerships.
Musk’s surprise trip to China came days after Tesla reported disappointing earnings last week (April 23). The once trillion-dollar company reported a 13 percent year-over-year decline in revenue during the quarter ended March 31. While Tesla hails itself as an A.I. and technology company, it has a lower operating margin than General Motors. Still, with promises of cheaper car models and future technologies like fully autonomous ride-sharing, Tesla’s stock rose 4.9 percent post-earnings.
“I still don’t understand why Tesla jumped after earnings. Numbers were bad, and I am shocked that investors are buying the hype around the Model 2 and Robotaxis,” Zaid Admani, host of the Public’s Rundown podcast whose financial news coverage has received more than 100 million views on social media, told Observer.
Musk’s successful trip to China sent Tesla’s stock price to jump more than 15 percent today after the market open. Adding icing to the cake, a statement released yesterday by the China Association of Auto Manufacturers said Tesla’s Model 3 and Y had passed China’s data security requirements, providing further confidence to investors.
China is Tesla’s largest market outside the U.S. and the largest market for EVs overall (around 60 percent of global EV sales occur in China). Tesla faces fierce competition from homegrown EV makers, including BYD, which briefly overtook Tesla as the world’s largest EV seller last year. BYD’s market share fell back behind the U.S. automaker in the most recent quarter.
