Business Insider Warns Elon Musk May Be Kicked Out Of China
Elon Musk may be slamming US President Joe Biden for not massaging his ego, but he has been kneeling before Chinese President Xi Jinping for the slightest infraction of his Tesla cars, all because he cannot afford to lose the China market and his Shanghai Gigafactory, according to Business Insider correspondent Linette Lopez.
Photo Insert: Elon Musk cannot afford to lose the China market and his Shanghai Gigafactory.
In her June 11, 2022 Business Insider story on Musk, Lopez said if it has been a bad year for Tesla, it has been a very bad, no good, terrible year for China. Beijing's zero-tolerance approach toward COVID-19 forced 31 cities into lockdown this spring.
Chinese Premier Li Keqiang, the second-most powerful person in the Chinese Communist Party, warned last month that the country will not meet its 5.5 percent GDP growth target for 2022, and that there will be no growth at all in the second quarter.
“If the problem is with China, we won't hear it from Musk, but we may see it. We'll see it in Musk's behavior. Dark, grandiose pronouncements about the economy, petulant refusals to honor contracts, and jabbing at his enemies — this is what Musk's meltdowns look like. And there's only ever one reason for those — Tesla, his money machine, is in danger of melting down, too,” Lopez warned.
If Musk should be concerned about a recession, it should be in China. The country was already slowing due to an overheated real estate market and President Xi's efforts to reshape the economy. It now has an 18.2 percent unemployment rate among citizens aged 16 to 24, as well as a growing migrant labor crisis.
All of this has been disastrous for Tesla. Musk's Shanghai factory was forced to close in March, then reopened, then closed again, and finally soft opened with limited manpower. On May 26, it resumed full production after a 50,000-car production halt. Tesla sold 1,512 China-made vehicles in April, a 98 percent decrease from the previous month.
Beijing is doing everything it can to stimulate China's economy, including offering a tax break to people who purchase electric vehicles priced under $45,000. The Model-Y SUV, Tesla's most popular vehicle, costs nearly $50,000 in China. Its Model 3 Sedan costs $42,000, but it has been experiencing double-digit sales declines in the Chinese market.
Meanwhile, Chinese EV makers with much cheaper cars — like BYD, for example — are expecting to see sales explode. "I think China has been covering persistent problems with Musk's US operations," Lopez quoted an industry source, "and he's losing his China cover."
Musk will never say anything negative about how Chinese officials handled the COVID crisis. This is due to the fact that he is fully aware of the terms of his stay in Shanghai.
The Chinese Communist Party owns the land on which his factory is built, and the party has made it clear that if Musk acts inappropriately, it will take back the land and everything on it.
In early 2021, Tesla was chastised in government-controlled media for quality issues with its vehicles. Sales plummeted almost immediately, and Tesla was forced to apologize.