Elon Musk and China have been hitting the headlines recently. The country recently barred all Tesla cars from its military bases and complexes, citing security concerns that the cameras on the vehicle could be used to spy on the installations.
Of course, Elon Musk denies this. During a virtual discussion with a Chinese business forum, he said, “There’s a very strong incentive for us to be very confidential with any information. If Tesla used cars to spy in China or anywhere, we will get shut down.”
There is indeed a strong incentive, particularly when it comes to car sales.
Musk targets China Market
China is the world’s biggest car market. Last year, it accounted for 30% of Tesla’s total car sales, a figure that is close to 150,000 vehicles. His announcement that he expects China to be both the biggest market and the biggest manufacturer of Tesla electric cars, seems well-timed to try and dispel any fallout from a potential spying scandal.
The SpaceX chief executive also predicted that China would become the world’s largest economy. In an interview with the Xinhua News agency, that was broadcast on Chinese State Television, he is quoted as saying.
“I would like to give an optimistic note, and I am sure that the future of China will be great and that China is heading to be the largest economy in the world.”
“In the long term, China will be our largest market, both where we will manufacture the most vehicles and where we will have most customers.”
With the Asian country already accounting for such a large part of Tesla’s market, it is no wonder he is trying to make all the right noises. In the same interview, he went on to praise the country’s economic and social plan. This plan sets out an ambitious path to reduce its carbon emissions by 18% by 2025.
A large part of achieving this is by switching from fossil-fuel vehicles to electric vehicles. Tesla would love to see itself at the forefront of this revolution and Elon Musk’s recent high-profile in the country is, therefore, no surprise.
Competition for Tesla
While America currently stands as Tesla’s biggest market, the car manufacturer is positioning itself to capture a larger slice of the Chinese market. Yet, despite the promising sales of last year and the increased production of Tesla’s Shanghai factory, the electric car manufacturer is expecting to face tougher competition in the coming years from Chinese domestic electric car manufacturers.
NIO Inc and Geely are two of the domestic electric car producers that are both planning aggressive expansion strategies to take advantage of the Chinese government’s plans to cut carbon emissions.
How this pans out remains to be seen. Three of China’s largest manufacturers are expected to report steep losses for the March quarter. Li Auto, Xpeng, and NIO are all suffering on several fronts, US-China tensions, a shortage of chips, and a recent market slump have greatly reduced investor confidence.
Profitable Tesla may just be in the right place at the right time to beat the Chinese at home.