Elon Musk's unique position as a prominent figure in both the U.S. and China raises questions about which nation might benefit more from his influence. In Shanghai, Musk's company Tesla has made significant strides, with two major facilities now operational. The Gigafactory, Tesla's first production center outside the U.S., and a new $200 million Megapack battery plant are crucial for Musk's ongoing success in China and globally.
The Gigafactory is responsible for producing half of Tesla's global output, around one million vehicles annually. While these cars serve the Chinese market, they are also exported to Europe and parts of Asia, though not yet to the U.S. Tesla's impact on China's electric vehicle industry has been substantial, making China Tesla's largest market outside America.
Michael Dunne, CEO of Dunne Insights, emphasizes China's critical role in Tesla's global success, suggesting that without China, Tesla's story would be vastly different. However, Musk's significant influence in the U.S. government, coupled with his financial interests in China, presents a complex dynamic, especially given the strategic competition between the two nations.
Musk's connections with both the Trump administration and Chinese leaders position him as a potential intermediary between the two largest economies. Yet, it remains uncertain whose interests he ultimately serves. Isaac Stone Fish of Strategy Risks notes that China might view Musk as a valuable asset, potentially advancing the interests of the Communist Party.
Despite Musk's popularity in China as an innovator, his fortunes could shift if U.S.-China relations deteriorate, especially if he becomes more associated with Trump-era policies. The White House and Tesla have not commented on these dynamics, while the Chinese Embassy in Washington encourages continued American investment in China.
Musk's establishment of the Gigafactory in 2019 marked Tesla as the first foreign automaker to build a factory in China without a local partner. This rapid development is often referred to as "China speed." China now represents over a third of Tesla's global sales, with significant market presence and a new version of the Model Y launching there before the U.S.
To maintain his business success, Musk requires support from Chinese regulators, who wield significant power. As competition from Chinese EV manufacturers intensifies, Tesla has introduced software updates to mimic its U.S. self-driving features, though these have yet to be approved in China.
Musk's careful approach to China contrasts with his outspoken views on politics elsewhere. He has opposed U.S. tariffs on Chinese EVs and made comments aligning with China's stance on Taiwan, drawing praise from Chinese officials but criticism from Taiwan.
Some see Musk's relationship with China as potentially beneficial for U.S.-China relations, while others, including U.S. lawmakers, view it with caution. They warn that China might leverage Musk to influence U.S. policies favorably. Concerns exist about Musk's growing role in Washington, with some suggesting he should focus on business rather than politics.