Tesla's High Dependence on China
The Chinese government is reportedly viewing the close relationship between Elon Musk, CEO of Tesla, and former Republican President Donald Trump positively, according to the Wall Street Journal (WSJ) on the 26th (local time). Former President Trump had announced plans to impose a high tariff of 60% on imports manufactured in China, but since Tesla has its largest overseas factory in China, it is analyzed that he may not strongly enforce tariffs against China.
According to WSJ, Tesla's largest overseas market is China, where it has a Shanghai factory capable of producing about one million Tesla vehicles annually. This factory is credited with significantly contributing to Tesla's growth into the world's most valuable automobile manufacturer.
Unlike other foreign automakers, Tesla received exceptional support from the Chinese government to establish its production base in China. WSJ explained, "Unlike Volkswagen and General Motors, which had to form joint ventures with local Chinese partners, Tesla became the first foreign automaker to have full control over its own factory in China, thanks to support from the Chinese government."
CEO Musk has played a role in easing tensions between the U.S. and China whenever conflicts escalated. Last year, he visited Beijing and emphasized talks between officials of the two largest economies in the world, opposing the decoupling of the two countries. On the other hand, former President Trump, whose chances of election have recently increased, was a hardliner on China policy and the instigator of the 2019 U.S.-China trade war. He pledged to impose a 60% tariff on imports made in China if re-elected.
WSJ reported that senior Chinese officials expect CEO Musk to act as a balancing force in a potential second Trump administration. Musk has actively campaigned for Trump's election. Therefore, it is said that if Trump is re-elected, he may not strongly push policies that would severely harm Tesla. In fact, during his presidency, Trump imposed a 15% tariff on Chinese products during the U.S.-China trade war but postponed tariffs on China after Apple CEO Tim Cook, who had a close relationship with him, expressed concerns that it could disadvantage Apple against Samsung.
Tu Le, founder of consulting firm Sino Auto Insights, told WSJ, "The Chinese government views the close relationship between Trump and Musk as a positive development and ultimately believes it will help ease the U.S. stance on Chinese electric vehicles and technology."
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