Elon Musk’s strategic pivot to China played a crucial role in saving Tesla when it was on the brink of failure. China offered cheap parts and capable workers, and it needed Tesla to jump-start its fledgling electric vehicle industry. This led to the establishment of a Tesla factory in Shanghai, which now accounts for over half of Tesla’s global deliveries and the bulk of its profits.
However, Tesla is now facing challenges in China and losing its edge over local competitors in the electric vehicle market. Furthermore, Musk’s reliance on China is drawing scrutiny from U.S. policymakers. His unusually symbiotic relationship with Beijing has profited from the Chinese government’s largess, even as he reaped subsidies in the United States.
As Musk explored building the factory in Shanghai, Chinese leaders agreed to a crucial policy change on national emissions regulations, following lobbying by Tesla. This change directly benefited Tesla, bringing in an estimated hundreds of millions of dollars in profits as China’s production took off.
Despite these benefits, Tesla’s growth in China has bound Musk to Beijing in a way that may give Beijing leverage over him. This is a concern because another company of Musk’s, SpaceX, has sensitive Pentagon contracts and controls much of the world’s satellite internet through its Starlink network.
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