Elon Musk Can’t Solve Tesla’s China Crisis With His Desperate Asia Visit

Elon Musk will be pleased that his surprise jaunt to China on Sunday garnered many glowing headlines. The trip was undoubtedly equally a surprise to Indian prime minister Narendra Modi, who had been scheduled to offer Musk the red carpet on a long-arranged visit.

The billionaire blew off India at the last minute, citing “very heavy Tesla obligations.” Indeed, Tesla has had a tumultuous couple of weeks, with federal regulator slap-downs, halved profits, and price-cut rollouts. Yet, in a very public snub that Modi won’t quickly forget, the company CEO made time for Chinese premier Li Qiang.

And well Musk might. Tesla needs China more than China needs Tesla. After the US, China is Tesla’s second biggest market. And ominously, in the first quarter of the year, Tesla’s sales in China slipped by 4 percent in a domestic EV market that has expanded by more than 15 percent. That’s enough of a hit for any CEO to jump in a Gulfstream and fly across the Pacific for an impromptu meeting with a Chinese premier.

Globally, Tesla has lost nearly a third of its value since January, and earlier this month, Tesla’s worldwide vehicle deliveries in the first quarter fell for the first time in almost four years. As they are wont to do, Tesla investors continue to complain over repeated delays to the company’s rollout of cars with genuine driverless capabilities.

One of Tesla’s stop-gap technologies—a now heavily-discounted $8,000 add-on—is marketed as Full Self-Driving, or FSD. But, like the similarly confusingly named Autopilot feature, it still requires driver attention, and may yet still prove to be risky.

Among the deals said to have been unveiled at Sunday’s meeting with Li Qiang was a partnership granting Tesla access to a mapping license for data collection on China’s public roads by web search company Baidu.

This was a “watershed moment,” Wedbush Securities senior analyst Dan Ives said in an interview with Bloomberg Television. However, Tesla has been using Baidu for in-car mapping and navigation in China since 2020. The revised deal, in which Baidu will now also provide Tesla with its lane-level navigation system, clears one more regulatory hurdle for Tesla’s FSD in China.