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Elon Musk wins official praise for Tesla during surprise visit to China

By Laura He, CNN

Hong Kong (CNN) — Elon Musk has made a surprise visit to China as he bids to shore up Tesla’s slumping sales and introduce the carmaker’s self-driving technology in its second biggest market in the face of ferocious competition.

His second trip to the country in less than a year included a meeting Sunday with Chinese Premier Li Qiang, who praised Tesla as a “successful model” for US-China collaboration.

The Tesla (TSLA) chief was in town to seek Beijing’s approval for the rollout of Full Self-Driving (FSD) software in China and the transfer of its data overseas, according to a Reuters report.

Virtually all Teslas have a driver-assistance system called Autopilot, while the more robust FSD feature comes at a premium price. Autopilot is available in China, but not the full FSD feature, which needs to comply with the country’s data security rules.

Musk appeared to have made progress on his goals during the two-day trip, which ended on Monday.

On Sunday, the China Association of Auto Manufacturers said in a statement that Tesla’s Model 3 and Y vehicles had passed China’s data security requirements.

Its cars had previously been barred from entering some sensitive areas in China due to spying and data security concerns. And since 2021, the company has been required to store local user data at a facility within the country because it faced scrutiny over whether its cars could ever be used for spying.

Tesla has also reached a deal with Chinese tech giant Baidu (BIDU) to form a partnership on mapping and navigation functions ahead of plans to deploy the FSD system, according to a Bloomberg report.

CNN has reached out to Tesla. Baidu has declined to comment.

Tesla’s stock gained more than 6% on Wall Street in pre-market trading, while Baidu’s shares closed up 2.4% on Monday in Hong Kong. Tesla shares have fallen 32% so far this year.

Competitive market

Musk’s trip coincided with the Beijing Auto Show, which opened last week, where global and Chinese EV makers are displaying their latest models and vying to draw consumers and attention in the world’s biggest EV market.

Tesla has recently made further aggressive price cuts in China and other major markets in the face of declining sales and growing competition.

“This is a watershed moment for Musk as well as Beijing at a time that Tesla has faced massive domestic EV competition in China along with softer demand,” said Dan Ives, managing director and senior equity research analyst for Wedbush Securities.

He said making FSD available in China has been “a key piece missing in the puzzle” for Tesla’s autonomous technology. But that’s not all.

If Musk is able to obtain approval from Beijing to transfer data collected in China abroad, according to Ives, it would be a “game changer” in terms of the acceleration of training its algorithms for its autonomous technology globally.

“We also believe this trip will be significant for Tesla and Musk further strengthening its EV footprint within the Chinese market at a pivotal time,” he said.

Musk’s trip comes just days after US Secretary of State Antony Blinken completed a visit to Beijing by meeting Chinese President Xi Jinping as the two countries try to stabilize ties.

Deeply integrated

Premier Li was full of praise for Tesla, which vies with China’s BYD for the title of the world’s top seller of battery electric cars.

“The economies of China and the United States are deeply integrated,” he said, according to an official readout of the meeting with the Tesla CEO. “You have me, and I have you. Both sides can benefit from each other’s development.”

Musk praised Tesla’s Gigafactory in Shanghai, which Li backed during his tenure as the city’s party secretary, calling it the company’s “best-performing” factory.

“Tesla is willing to further deepen cooperation with China and achieve more win-win results,” Musk told Li.

Also on Sunday, Musk met with Ren Hongbin, chairman of the China Council for the Promotion of International Trade, a government-backed trade body that invited him to Beijing on this trip.

The two talked about Tesla’s future development in China and the prospect of strengthening exchanges between the American and Chinese business communities, according to the CPPIT’s statement.

On Monday, Musk posted about his meeting with Li on both X, the social media platform that he owns, and Weibo, the Chinese equivalent of X — where he has 2.2 million followers.

“Honored to meet with Premier Li Qiang. We have known each other now for many years, since early Shanghai days,” he said, attaching a screenshot of the meeting from Chinese state media.

Musk first met Li in 2018, when Tesla signed a deal with the Shanghai government to open a plant there. Li was then Shanghai’s party boss and seen as a rising political star.

According to Chinese state media, Li provided major support to Tesla and allowed the US company to become the sole owner of its Shanghai factory, while all other foreign automakers were required to partner with local firms.

Since then, Musk has met with Li publicly at least five times, according to state media reports and government statements.

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