Elon Musk-Xi Jinping meeting shows tight relationship China has with Tesla

The cosy relationship between Elon Musk’s Tesla Inc. and China was on display again on Wednesday when President Xi Jinping expressed support for the US electric carmaker in China and Musk in turn expressed his gratitude for that warm reception.

According to a Weibo post from Tesla’s official China account, Musk, the CEO of Tesla, attended a banquet on the evening of Nov. 15 to welcome Xi, who’s in San Francisco to meet and hold talks with US President Joe Biden as part of this week’s Asia-Pacific Economic Cooperation leaders’ meetings.

At the dinner, Xi “met with Elon Musk and other important representatives in a small gathering, showing support for Tesla’s development in China," the post said.

“Musk expressed gratitude and applauded the fast growth of China’s new-energy vehicle sector," Tesla’s Weibo post said, noting that this year marks the 10th anniversary of Tesla’s entry into China and its factory in Shanghai, built in 2019, has “become a crucial production and export hub for Tesla."

“We are very honored to be part of the fast growth and hope to express our sincere gratitude to the encouragement and support from all friends," it continued. “We will continue to dive deep in China."

Xinhua News Agency earlier reported that Musk said Tesla’s business in China is going “very well" and he’s “very happy" with its progress, citing an interview with the world’s richest man.

While other parts of Musk’s empire, notably SpaceX and its Starlink satellites that offer high-speed internet access, have received a frosty reception — Beijing doesn’t allow SpaceX to provide web access to Chinese users via Starlink — Tesla has experienced an altogether different welcome.

The US automaker has enjoyed perks in China — the world’s biggest car market and also the largest for EVs — that other international companies have struggled to obtain. Most notable was China’s allowing Tesla to wholly own its domestic operations rather than having to share custody with a local joint venture partner.

Tax breaks, cheap loans and other forms of assistance have subsequently helped turn China into Tesla’s most important market outside the US. Now, Tesla’s Shanghai manufacturing hub is key for the automaker, producing over 710,000 cars in 2022, representing more than half of the company’s global output.

But the path hasn’t always been smooth with Tesla also facing negative press coverage and online criticism about the safety of its cars. Teslas have also been prevented from entering Chinese military complexes and housing compounds in recent years, with those curbs stemming from concerns about sensitive data being collected by cameras built into the vehicles, although Tesla and Musk have vowed local data rules are always followed.

Tesla started exporting Model 3 sedans built at the Shanghai factory in late 2020, less than a year after beginning production at its first overseas car plant. By July 2021, the company referred to the facility as its primary vehicle export hub. Currently, the plant on the outskirts of China’s financial hub has the capability to make 1.1 million EVs every year.

To better compete in China, Tesla recently launched a revamped Model 3 sedan and renovated Model Y sport utility vehicle. It raised the prices of both models slightly after steep markdowns earlier this year that ignited a fierce price war in the country among both international and domestic automakers.