From electric cars to solar panels, Mr. Musk has built businesses in high-tech manufacturing sectors now targeted by Beijing for Chinese dominance Elon Musk’s SpaceX, which recently tested its massive Starship with Donald Trump among the guests, faces increasing competition from Chinese state-backed companies also aiming to dominate the space launch industry. Tesla Energy, which produces large battery packs for energy storage alongside solar or wind power, operates in a market dominated by China, the world’s leading supplier of solar panels. However, Tesla, in partnership with South Korea’s Qcells, has maintained a foothold in this sector. Additionally, while China produces most of the world’s tunneling machines, Musk’s Boring Company is expanding its own projects in Texas.
Despite fierce competition in several industries, Musk’s electric car business faces a more complicated landscape in China. The country is not only Tesla’s largest consumer market but also home to its biggest single assembly plant, located in Shanghai. This facility, built in under a year, supplies much of Europe after challenges at Tesla’s German plant. Tesla has also imported car battery packs from China to the U.S. to support production.
However, Chinese regulators have not yet allowed Tesla to deploy its Full Self-Driving technology, while local companies like Nio, Huawei, and Baidu have been approved for similar systems. Premier Li, who met with Musk earlier, was instrumental in speeding up the Shanghai factory’s construction, but Tesla still awaits approval for its self-driving tech. Without an intelligent driving system, Tesla is at a disadvantage in the Chinese market.
Though Tesla gained immediate popularity in China in 2020, transforming the electric car market, its sales have since slowed due to aggressive price wars waged by Chinese automakers, supported by low-interest loans from state banks. Tesla has joined the price battle, but local rivals are outperforming it.
Tesla, like most American companies in China, also faces political risks. The Biden administration has initiated proceedings to ban the import of cars with digital network connections from China or Russia, which could lead to Chinese retaliation by restricting Tesla’s operations in sensitive areas, such as military zones, where Tesla cars have already been banned.
The critical factor for Musk’s influence on Sino-American trade relations is how long his close ties with Trump will last. Despite Musk’s significant financial contributions to Trump’s campaign, some analysts predict that the two men’s relationship, marked by their large egos, may eventually falter.