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Here’s how Elon Musk became “kind of pro-China.”

Mr. Musk helped create China’s electric vehicle industry. But he is now facing challenges there as well as scrutiny in the West over his reliance on the country.

Elon Musk, Tesla’s chief executive, dancing onstage during a delivery event for Tesla’s China-made Model 3 cars in Shanghai in 2020.Credit...Aly Song/Reuters

Elon Musk, Tesla’s chief executive, dancing onstage during a delivery event for Tesla’s China-made Model 3 cars in Shanghai in 2020.Credit...Aly Song/Reuters

Now Europe and the United States are trying to catch up. The French finance minister, Bruno Le Maire, says China has a five- to seven-year head start on Europe.

And Tesla itself is increasingly vulnerable. Its Chinese rival BYD overtook it in worldwide sales late last year. Without trade barriers, Mr. Musk warned in January, BYD and others will “pretty much demolish most other car companies in the world.”When Elon Musk first set up Tesla’s factory in China, he appeared to have the upper hand.

He gained access to top leaders and secured policy changes that benefited Tesla. He also got workers accustomed to long hours and fewer protections, after clashing with U.S. regulators over labor conditions at his California plant. The Shanghai factory helped make Tesla the most valuable car company in the world and Mr. Musk ultrarich.

But Tesla is now struggling. Mr. Musk helped create his competition, Chinese E.V. makers that are taking market share and becoming a security concern for the United States and Europe.

In California, where Tesla launched its first car in 2008, the company has profited from an emissions mandate that allows it to sell credits — billions of dollars worth of them — to automakers that cannot meet pollution targets.

In California, where Tesla launched its first car in 2008, the company has profited from an emissions mandate that allows it to sell credits — billions of dollars worth of them — to automakers that cannot meet pollution targets.Beijing adopted the policy, which was also being promoted by groups unconnected to Tesla, in 2017. After Tesla opened its Shanghai factory in 2020, the company earned hundreds of millions of dollars in credits through the policy, according to the market analysis company CRU Group.

The Shanghai factory has replaced Tesla’s plant in Fremont, Calif., as its largest and most productive, accounting for over half of the company’s global deliveries and the bulk of its profits.

As the plant took shape in just under a year, Mr. Musk worked closely with a city official who is now China’s premier, Li Qiang. Under Mr. Li’s watch, state-run banks offered Tesla low-interest loans, a deal so generous that a senior auto official recalled a minister balking at it.

China also changed ownership rules so that Tesla could set up without a local partner, a first for a foreign auto company in China.Mr. Musk saves on production and labor costs in Shanghai and cannot easily extricate himself, should he ever want to. Because the billionaire's wealth is tied up in Tesla stock, his personal fortune now hinges on what happens in China.

Mr. Musk’s reliance on the Shanghai factory may give Beijing leverage over him.

That’s a concern because a second company of Mr. Musk’s, SpaceX, has sensitive Pentagon contracts and controls much of the world’s satellite internet through its Starlink network.

Mr. Musk has said that his companies should not be conflated. But he has also praised Chinese leaders and taken China’s side in geopolitical disputes, even as he rails against politicians in the United States.

In an online conversation with two members of Congress in July, he called himself “kind of pro-China.”

Mr. Musk, who has insinuated that American workers are lazy, demanded intensity at Tesla’s Fremont factory, sometimes even sleeping on the factory floor himself.In Shanghai, Mr. Musk could escape American regulators and labor organizers.

We talked to Chinese factory workers who described being asked to work six consecutive twelve-hour shifts during the city’s 2022 coronavirus lockdown.

Some slept on the floor of the factory, as Mr. Musk had in Fremont. They could choose not to work, but for a pay cut, they said.

When a worker was crushed to death by machinery last year, a government report citing safety gaps was taken offline.

Chinese leaders wanted a Tesla plant to jump-start China’s E.V. sector. That’s exactly what happened.

In Shanghai, Tesla switched to using locally made batteries and parts, in some cases helping suppliers develop technologies that they then sold to Chinese E.V. makers. Tesla also trained a generation of talent.

 

Mara Hvistendahl is an investigative reporter for The Times focused on Asia. More about Mara Hvistendahl

Author: Editors Desk, Mara Hvistendahl

Source: News Corp Australia Network:

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