Elon Musk visits Tesla’s Gigafactory in China amidst increasing competition in the EV market

Tesla CEO Elon Musk has made his first trip to China in three years, meeting with senior Chinese officials and visiting the company’s Gigafactory in Shanghai. Musk’s visit comes amid increasing competition in China’s electric vehicle (EV) market and uncertainty around Tesla’s demand in the country.[0] China is Tesla’s second-largest market after the US, and the Shanghai factory is the company’s largest production hub, accounting for more than half of its global production in 2022.[1] Musk’s visit has sparked rumors of a potential release of Tesla’s Full Self-Driving Beta in China and the launch of the revamped Model 3 sedan.

During his visit, Musk met with China’s Foreign Minister Qin Gang and reportedly discussed Tesla’s willingness to expand business operations in China. The Chinese government welcomed Musk and other business leaders, stating its commitment to creating a better market-oriented, rule-of-law-based, and internationalized business environment.[1] According to a Bloomberg report earlier this month, Tesla was on the verge of commencing trial production of its upgraded Model 3 in Shanghai. Elon Musk is confident that this move will enable the company to rival Chinese competitors more effectively.

Tesla’s Gigafactory in Shanghai can produce up to 1.1 million vehicles annually and is also set to house a new battery factory capable of producing 10,000 new Megapacks annually.[0] While Tesla has not given any guidance update on plans to increase output by 450,000 vehicles a year at its Shanghai plant, the company continues to expand its manufacturing and battery footprint in Austin, Texas.[2] However, China remains a vital market for Tesla on both the supply and demand fronts, with the company contributing almost one-quarter of Shanghai’s total automotive production value last year.

Tesla’s stock jumped higher by as much as 6% on news of Musk’s visit, signaling a renewed focus on Tesla’s operations in China.[3] Despite increasing geopolitical tensions between the US and China, analysts note that China remains “the golden goose EV market” for Tesla and that playing nice in the sandbox in Beijing is crucial to the company’s expansion in the country for the coming years.[4] Tesla’s success in China will depend on its ability to balance its production and demand while fending off domestic competition from firms like BYD, Nio, and Xpeng.

In his visit to China, Musk also praised the country’s space technology, saying that its space program is “far more advanced” than most people realize.[5] The comments come amid China’s push to show that it is open to foreign business, and as Musk reportedly signaled further expansion of his car company’s business in China.[3] While Tesla did not issue any statement on Musk’s visit, investors remain optimistic about the company’s future in China’s EV market.[6]

0. “Tesla Stock: Here’s What You Need to Know About Elon Musk’s Visit in China” TipRanks, 30 May. 2023, https://www.tipranks.com/news/article/tesla-stock-heres-what-you-need-to-know-about-elon-musks-visit-in-china

1. “Elon Musk Meets Chinese FM, Reaffirms Tesla’s Commitment To China” InsideEVs , 30 May. 2023, https://insideevs.com/news/669732/elon-musk-meets-chines-fm-reaffirms-tesla-commitment-china/

2. “Elon Musk Visits China As Tesla Races Toward Buy Point” Investor’s Business Daily, 30 May. 2023, https://www.investors.com/news/tesla-stock-racing-toward-buy-point-as-elon-musk-visits-china/

3. “Tesla shares rise as Elon Musk meets with China’s foreign minister” CNBC, 30 May. 2023, https://www.cnbc.com/2023/05/30/tesla-ceo-elon-musk-meets-chinas-foreign-minister-touts-expansion.html

4. “Tesla’s stock jumps 4% as Elon Musk makes first visit to China in about three years” MarketWatch, 30 May. 2023, https://www.marketwatch.com/story/tesla-stock-jumps-3-premarket-as-wedbush-says-musk-visit-to-china-comes-at-key-time-for-company-95434dd6

5. “Elon Musk Praises China’s “Far More Advanced” Space Programme Ahead Of Beijing Visit” NDTV, 30 May. 2023, https://www.ndtv.com/world-news/elon-musk-praises-chinas-far-more-advanced-space-programme-ahead-of-beijing-visit-4078334

6. “Why Tesla Stock Moved Higher Again Today” The Motley Fool, 30 May. 2023, https://www.fool.com/investing/2023/05/30/why-tesla-moved-higher-again-today/