Tesla founder and CEO Elon Musk met with Chinese Premier Li Qiang in Beijing on Sunday, just as the nation's carmakers showcase their latest electric vehicle (EV) models at the ongoing Beijing auto show. The meeting, which was not announced in advance, comes as Tesla faces increasing competition from Chinese automakers in the world's largest automobile market.
During their meeting, Li told Musk that he hopes the United States will engage with China on "win-win" cooperation, citing Tesla's operations in China as a successful example of economic collaboration. "China's very large-scale market will always be open to foreign-funded firms," Li was quoted as saying by Chinese state media. "China will stick to its word and will continue working hard to expand market access and strengthen service guarantees."
Musk, in a post on X (formerly Twitter), said he was "honoured" to meet the No. 2 official, adding, "We have known each other now for many years, since early Shanghai days." The billionaire entrepreneur's trip comes just over a week after he cancelled a scheduled visit to India to meet Prime Minister Narendra Modi due to "very heavy Tesla obligations."
For China, Musk's visit serves as a welcome antidote to the tough talk from U.S. officials, which played out most recently during Secretary of State Antony Blinken's visit. Li's remarks also reflect China's efforts to attract foreign investment to boost its flagging economy, which has been impacted by sluggish sales in the EV market, in part due to fierce competition from Chinese brands.
It remains unclear whether Musk will visit the auto show, where Chinese automakers and startups have launched a bevy of electric cars in recent years, some going head-to-head with Tesla and undercutting the American maker on price. Tesla operates its biggest manufacturing plant outside the U.S. in Shanghai, where about half of its vehicles are produced.
The company recently cut prices in China, dropping the Model 3 to 231,900 yuan ($32,700) and the Model Y to 249,900 yuan ($35,200), following similar reductions in the U.S. These price cuts come as Tesla struggles with sluggish sales, with vehicle deliveries falling by 8.5 percent in the first quarter, contributing to a 40 percent slide in its stock price since July.
Despite these challenges, Tesla reclaimed the title of the world's biggest electric vehicle maker in the first quarter of this year, after being dethroned by Chinese auto giant BYD in the last three months of 2023. However, the competition from Chinese automakers remains fierce, with foreign automakers such as Volkswagen and Nissan scrambling to develop new EV models to hold onto or claw back market share in China.
The green energy subsidies provided by the Chinese government have helped transform the country's auto market, with EVs reaching about a quarter of new car sales last year, eating into demand for gasoline-powered vehicles. However, the European Union has launched an investigation into Chinese subsidies for the EV industry that could lead to tariffs on electric vehicles made in China, potentially including Tesla cars.
