musk china remarks

Elon Musk is an avid Twitter user and often gets into controversies over his tweets. In the most recent case, China rebuffed the billionaire after he replied to a tweet about the Wuhan lab leak report.

The US Department of Energy concluded with “low confidence” that the COVID-19 pandemic “likely” originated in a lab in Wuhan. The first cases of the deadly virus were first reported from Wuhan.

Many criticized China for its initial response to the pandemic and former President Donald Trump used to call the coronavirus the “Chinese virus” or “Wuhan virus.”

China meanwhile has been quite sensitive about how many in international media portrayed its handling of the virus. The country punished Australia, which was quite vocal about an investigation into the origins of COVID-19, with trade restrictions.

By dragging his feet into the Wuhan lab leak saga, Musk has also irked China. Global Times, the tabloid run by the Chinese Communist Party has lashed out at Musk and said he could be “breaking the pot of China,” according to the translation by CNBC.

China is the world’s largest EV market and has the highest NEV (new energy vehicle) penetration levels among major economies. It is the second largest market for Tesla and the Elon Musk-run company got several incentives as it expanded its business in the country.

Musk Irks China with His Tweet on Wuhan Lab Leak Report

Tesla managed to set up operations in China without partnering with any Chinese company which was a first for the communist nation. Tesla and Musk got a fairly red-carpet welcome in China and state-owned institutions offered the company loans at generous terms. It also managed to get the approvals for its Shanghai Gigafactory in a quick time.

Also, China extended its EV subsidy for some Tesla models. The country had until then reserved the subsidies for domestic manufacturers.

However, over the last year, relations between China and Tesla have soared. In 2021, China banned Tesla cars from some government compounds over “spying concerns.” While Musk denied that Tesla cars could be used for spying, it did not cut ice with China. He even started a new data center in China to store all data collected in the country locally.

Relations between China and Tesla have Soared Lately

Reportedly, China delayed the expansion of Tesla’s China Gigafactory on concerns over Starlink. The country has strict internet firewalls which it believes can be breached by Starlink.

Notably, Tesla uses its China Gigafactory for domestic demand as well as exports. Analysts widely agree that it is Tesla’s most productive and profitable plant. Musk too has praised Chinese workers and the manufacturing ecosystem several times.

During Tesla’s Q4 2022 earnings call Musk said that in the future a Chinese EV company could come “second to Tesla.”

China was quite welcoming of Tesla as it sees EVs as a key part of its “Make in China 2025” program. Domestic Chinese EV companies have now scaled up operations in the country and BYD has surpassed Tesla to become the largest NEV seller globally.

Several Chinese companies like NIO are now expanding globally which would intensify their competition with China. Many analysts see NIO as a worthy competitor to Tesla. There is a guide on how to buy NIO stock.

Musk Has a History of Placating Foreign Governments

Musk has been quite critical of US government agencies like the SEC and NHTSA (National Highway Transport Safety Administration). He has criticized the Fed as well as President Biden multiple times.

However, when it comes to foreign governments, Musk has been more reconciliatory. Twitter for instance deleted a BBC documentary critical of Indian prime minister Narendra Modi. As for China, he even suggested that Taiwan should become a special administrative zone of China like Hong Kong.

Incidentally, many analysts see Musk’s ownership of Twitter and his flamboyant tweets as a potent risk for Tesla stock. However, bulls like Cathie Wood are not too perturbed and keep buying more Tesla shares.

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