Tesla displays a vehicle suspension at the center of its booth at the China International Consumer Products Expo in Haikou, South China's Hainan Province, on April 12, 2023.Photo: Xie Jun/GT

 

Tesla CEO Elon Musk arrived in Beijing on Tuesday for his first visit to the country in three years, attracting great fanfare on Chinese social media and lifting Tesla's stock prices back in the US, in an apparent rejection of slander against Chinese market and of the US' push for a so-called decoupling. 

The trip and the widespread attention it has drawn offer a reminder that US businesses will not blindly follow their politicians' calls to decouple from the world's second-largest economy, experts noted.

On the contrary, US firms are actively seeking to expand in the Chinese market, which has been rebounding in full swing after the COVID-19 prevention strategy was optimized at the end of 2022, experts said. 

Chinese State Councilor and Foreign Minister Qin Gang met with Musk on Tuesday, stressing that China is committed to offering a market-oriented, law-based and international business environment for foreign enterprises, including Tesla. Qin compared China-US relations to driving a Tesla vehicle, which requires keeping the steering wheel in the right direction of mutual respect, peaceful coexistence and win-win cooperation.

China always welcomes business figures from all countries, including Mr. Musk, to visit China for a deeper understanding of the country and mutually beneficial cooperation, Mao Ning, a spokesperson for China's Foreign Ministry told a press conference earlier on Tuesday, in response to a question about Musk's trip.

"China is firmly committed to advancing high-level opening up and fostering a market-oriented, law-based and internationalized business environment. We welcome foreign companies to invest and do business in China, explore the Chinese market and share in development opportunities," Mao said. 

Before Musk's arrival in Beijing, the visit was closely followed on Chinese social media platforms after reports of the trip emerged. Reports of Musk's private jet arriving in Beijing was widely circulated on social media, where some also launched an online poll of what Beijing delicacies netizens recommend for the Tesla CEO. Douzhi, a fermented mung-bean drink, topped the list. 

Musk's trip was also welcomed by Tesla investors, as shares of Tesla jumped 5 percent shortly after markets opened Tuesday before falling back, according to CNBC.

This marks Musk's 10th trip to China, surpassing the number of trips made by most other foreign businesses, and he is expected to focus on Tesla's further expansion in the Chinese market during the trip.

Yale Zhang, head of Shanghai-based consultancy Automotive Foresight, said that one of the purposes of Musk's visit might be to look at expanding the company's plant in Shanghai. 

As global demand for cars weakens, coupled with the intensifying competition among electric vehicle (EV) makers in China, Tesla needs new models to boost its sales, Zhang told the Global Times on Tuesday. 

Tesla announced early last year that it would launch a new Model 3 with upgrades to the interior and the power system. Musk also teased two new EVs at Tesla's annual shareholder's meeting earlier this month, and one is believed to be the so-called Model Q or Model 2 hatchback, which will be cheaper and smaller than the Model 3 sedan.

"The mass production of new products is highly likely to be based in its Shanghai Gigafactory, so it might need to expand the production line," Zhang noted.

The Gigafactory in Shanghai, the country's first wholly foreign-funded vehicle production project, broke ground in early 2019. One year later, Musk attended a ceremony in the factory to mark the first deliveries of made-in-China Tesla vehicles to customers. 

The Shanghai Gigafactory delivered more than 710,000 EVs in 2022, taking up half of its global deliveries, and it has become Tesla's main export center in the world.

On top of the vehicle business, Musk is likely to promote the company's Megapack energy storage products, according to Zhang.

Tesla said in April that it would open a factory in Shanghai capable of producing 10,000 Megapack energy products per year to supplement the output of the Megapack factory in California.

The success of Tesla's Shanghai plant and the company's steady rise in the Chinese market is a testament to China's fast-growing EV sector and its unique advantages as a global manufacturing hub, and this is something transnationals must not miss out on, Xiang Ligang, director-general of the Beijing-based Information Consumption Alliance, told the Global Times on Tuesday.

Revenue in the Chinese market, the second-largest market for Tesla, hit $4.89 billion in the first quarter of 2023, up by 5.18 percent year-on-year and accounting for nearly 21 percent of overall revenue, according to Tesla's quarterly report and industry data.

"The stellar performance of Tesla in the Chinese market shows that solid trade and economic cooperation between China and the US is an irreversible trend," Ma Jihua, a veteran technology expert, told the Global Times on Tuesday.

The recent visits by a number of senior US executives indicate that US firms attach great importance to the Chinese market, Ma added.

Laxman Narasimhan, new global CEO of US coffee giant Starbucks, recently visited China. Highlighting China's huge market potential, Narasimhan said the company's goal to open 9,000 stores in the Chinese mainland by 2025 remained unchanged, according to a note the company sent to the Global Times.