Tesla, Elon Musk in China for the agreement on a new factory
“We don’t want the decoupling“. That is, the economic decoupling. To speak is Elon Muskwhich landed in Tuesday May 30th China with his private jet for a very significant trip, proof that the big US technological giants do not even dream of blocking relations with Beijing as the White House would like (at least in part). The more Washington talks about decoupling, pardon risk reduction to put it mildly Ursula von der Leyenand more its captains of industry are marching to China to try and keep the door open to an immense and now recovering market after three years of the Covid-19 pandemic.
Just arrived, Musk immediately met with Xi Jinping’s foreign minister, Qin Gang. Upon hearing the news, Tesla’s shares soared immediately, proving that investors welcome maintaining relations with China. Qin, who was until recently China’s ambassador to the United States, said the “Chinese style modernization”characterized by a huge population and “common prosperity,” will create “unprecedented growth potential and market demand,” according to a statement from China’s foreign ministry.
He added that the Chinese electric vehicle market “has broad development prospectsand that China will continue to open up and create a better market-oriented and law-based business environment for foreign companies like Tesla. According to the Chinese Foreign Ministry statement, Musk praised the Chinese people and China’s achievements Tesla opposes “decoupling” and is willing to continue expanding its business in China, the statement said.
Musk’s visit comes as his creature faces increased competition and a price war in China. Tesla priced its cars in China amid a tougher macroeconomic backdrop in the world’s second-largest economy. The statement from China’s foreign ministry didn’t provide much detail on what was discussed between Musk and Qin. China is Tesla’s second-largest market, and Musk has been trying to maintain good relations with Beijing. The billionaire has pledged investments over the years and praised the country’s technology.
Not just musk. The US giants do not want decoupling with China
There Tesla’s largest car factory is located in the Chinese megacity of Shanghai and in April, the company announced plans to build another factory on site to produce the Megapack energy storage system. It is highly probable that Musk will talk about his plan with the other officials he meets in recent days, starting with Premier Li Qiang, whom Musk has known well since he was party chief in Shanghai.
The new Tesla factory in China will initially produce 10,000 Megapack units per year, equivalent to approximately 40 gigawatt-hours of energy storage, to be sold globally. With the new Shanghai plant, Tesla will leverage the world’s leading battery supply chain in China to ramp up production and lower costs of its Li-ion Megapack units to meet growing demand for energy storage globally. as the world moves towards using more renewable energy.
Another question for investors is whether Chinese regulators will allow the release of Tesla’s advanced driver assistance features, available in the US as part of “Full Self Driving” software that sells for $15,000 per vehicle. Tesla’s business in China has been hugely successful, with the Beijing market accounting for about a third of its annual sales. However, Tesla’s decision to cut prices in China late last year was the first move in a price war that has intensified competition, especially with its local rival. BYD.
The meeting between Musk and Qin comes at a time of continuing tensions between the United States and China over technology. Last year, Washington imposed sweeping restrictions on the export of semiconductor chips and equipment to China, in a move that could stymie Beijing’s efforts to boost domestic industry in a critical technology.
Musk’s visit proves that though American tech giants don’t want to sever ties. Musk’s arrival in China also coincides with a trip by the CEO of JPMorgan Jamie Dimon, which is bringing together American and Chinese business leaders for a summit in Shanghai this week. It also follows a string of visits in recent weeks by rival auto industry leaders, including Volkswagen’s Oliver Blume and Mary Barra of General Motors. At the end of March, however, the CEO of Apple, Tim Cook, who had spoken of a “symbiotic relationship” between Cupertino and the Asian country. Not quite music to Biden’s ears.
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