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Elon Musk says he wants to expand China business in FM meeting

By Agence France-Presse Published May 31, 2023 10:19 am

Elon Musk said Tuesday, May 30 he was willing to expand his business in China, as he met Foreign Minister Qin Gang in Beijing on his first trip to the country in over three years.

China is the world's biggest electric vehicle market and Musk's company Tesla announced in April it would build a second massive factory in Shanghai.

Musk said he was "willing to continue to expand its business in China," according to a foreign ministry readout in which he also reportedly stressed Tesla's opposition to economic "decoupling" with the United States.

Qin told Musk that China was "committed to creating a better market-oriented, rule-of-law-based and internationalized business environment" for foreign enterprises, the ministry said on its website.

The two countries, Qin said, should "apply the brakes in a timely manner to avoid dangerous driving."

Musk's extensive business ties to China have raised eyebrows in Washington, with US President Joe Biden saying in November that the executive's links to foreign countries were "worthy" of scrutiny.

The battery factory announced in April will be Tesla's second plant in Shanghai after Gigafactory, which broke ground in 2019.

The new plant, which will have an initial capacity of 10,000 Megapack battery units per year, is expected to "start production in the second quarter of 2024," according to state news agency Xinhua.

Electric vehicles make up a quarter of car sales in China, the world's largest car market, and dozens of new models from domestic and Western brands were unveiled in April at the country's first auto show since COVID-19 restrictions were lifted.

Analysts said they expected much of Musk's China trip to focus on the Gigafactory, which they said "remains the heart and lungs of the Tesla production globally."

"Tesla continues to aggressively focus on building out its China footprint as this remains the golden goose," analysts from the Wedbush Securities investment firm said in a note.

Largest market

Tesla has recently hit its stride after years of losses, scoring an impressive string of earnings records as it has added factories and ramped up production.

It has also acted as a major catalyst for a revolution in transportation, driving much of the industry's innovation efforts in moving away from the internal combustion engine towards electric vehicles. 

Even with that success, Musk has fallen short of some of his outsized goals.

Tesla reported a drop in first-quarter earnings this year, with the company undertaking a series of price cuts in the face of competition from other automakers. 

Tesla's lowest-priced vehicle, the Model 3, begins at more than $40,000 in the United States—too pricey for many consumers even though the vehicle had been pitched at the mass market.

Musk has also missed his own deadlines for a fully autonomous vehicle, with Tesla driver-assistance technology spurring US regulatory probes.

And while Tesla remains the world's largest seller of EVs, the popularity of Chinese brands has soared in recent years. 

The largest of them, BYD, saw its profits jump fivefold in the first quarter thanks to global demand for its cars and buses.

Chinese foreign ministry spokesperson Mao Ning said that the country welcomed visits by international executives "to better understand China and promote mutually beneficial cooperation." (AFP)