Elon Musk pays surprise visit to Beijing amid Chinese ‘curbs’ on Tesla cars

Tesla CEO Elon Musk on Sunday (April 28) made a surprise visit to China and met Chinese Premier Li Qiang and other officials to discuss lifting all restrictions on moving and parking of Tesla vehicles in some sensitive areas in the country over fears of breach of sensitive and strategic data.

A recent report said that Tesla car drivers in China are reportedly facing entry bans in government-affiliated buildings amid rise in security concerns with the US.

According to the report published by Nikkei Asia, several meeting halls and exhibition centres across the country have been prohibiting the entry to Tesla vehicles to their premises. The report stated that previous restrictions for the vehicles were generally limited just to military bases, but now a growing number of highway operators, local authority agencies, and cultural centres are reportedly enforcing them.

Musk arrived in Beijing on Sunday at the invitation of the China Council for the Promotion of International Trade Automobile company as Tesla has been in negotiation with the Chinese authorities about the lifting of all restrictions, the state-run China Daily reported.

What was discussed?

The restrictions included moving and parking in some sensitive areas in the country, as Tesla’s electric vehicles, or EVs, passed an authoritative national data inspection in China, the daily quoted official sources as saying.

Musk visited to discuss topics including removing restrictions on Tesla EVs in some sensitive areas, such as government agencies, as well as launching the vehicles' full self-driving functions in the country, it said.

Musk made the visit mainly because of the data issue and not there for the ongoing Auto China show in Beijing, as has been reported, it said.

In his meeting with Musk, Li said that China's huge market will always be open to foreign-funded enterprises.

He said that the country will work hard on expanding market access and improving services to provide foreign-funded enterprises with a better business environment and stronger support so that companies from all countries can invest in China with peace of mind.

Noting Tesla's development in China can be called a successful example of China-US economic cooperation, Li said facts have proven that equal cooperation and mutual benefit are in the best interests of the two countries.

“It is hoped that the US and China will meet more halfway and promote the stable development of bilateral ties under the strategic guidance of the two heads of state,” he added.

Musk to meet ‘old friends’ in Beijing

Stating that Tesla's Shanghai Gigafactory is the company’s best-performing factory, Musk expressed his willingness to deepen cooperation with China to achieve more win-win results, official media reported.

Musk is expected to meet senior Chinese officials at the State Council and "old friends" in Beijing, Hong Kong-based South China Morning Post reported.

His Tesla has become a popular EV in China after he set up a USD seven billion factory in Shanghai which went into production in 2020.

Musk, who recently skipped a scheduled visit to India to meet Prime Minister Narendra Modi to firm up plans to open a Tesla factory in the country, is visiting Beijing when his Tesla market in China is threatened by rising sales of locally-made EVs.

Stiff competition from local players

Tesla has faced fierce competition from Chinese EV makers in the past few years. It has cut the prices of its Shanghai-made vehicles by up to six per cent to maintain its leading position in China's premium EV segment.

Grace Tao, Tesla's vice-president of external relations in China, wrote a commentary piece in China's official newspaper People's Daily on Friday (April 26), saying autonomous driving is a key growth driver for the country's new energy vehicle sector, arguing that the technology will hatch new business models such as robotaxis, a vision that Musk has embraced, the Post reported.

Tesla’s ties with China

Musk's latest visit to China coincides with the 2024 Beijing Auto Show, which kicked off on Thursday.

As a strong backer of Beijing in the US despite concerns over China's rise across the political divide in Washington, Musk enjoys red-carpet treatment in China.

In 2019, Tesla was allowed to drive cars into the Zhongnanhai compound, the living and working area of Chinese leaders, when former Premier Li Keqiang hosted the CEO, and during Musk's three-day visit to Beijing last June he was received by then foreign minister Qin Gang, according to the Post report.

The trip was warmly received by the Chinese public, with social-media posts focusing on the Chinese food Musk ate, and some referring to him as a "pioneer" and "brother Ma".

Tesla, the leader in China's premium EV segment, delivered 603,664 Model 3s and Model Ys made at its Shanghai Gigafactory to buyers in China last year, an increase of 37.3 per cent over 2022.

The growth rate matched the 37 per cent rise in sales recorded in 2022 when it delivered about 440,000 vehicles.

Tesla has sold more than 1.7 million cars in China since it entered the market in 2012 and located its biggest factory in Shanghai, where Musk enjoys high levels of political support for the project.

In a sign of its further commitment to China, Tesla bought a parcel of land in Shanghai to build a factory with a planned annual capacity of 10,000 Tesla Megapack batteries, which are used for battery storage stations.

His visit to China also coincides with Tesla's recent announcement to lay off "more than 10 per cent" of its global headcount to cut costs and boost productivity.

(With inputs from agencies)