Elon Musk won official praise for Tesla during a surprise visit to China

Elon Musk won official praise for Tesla during a surprise visit to China

Elon Musk has made a surprise visit to China as he bids to boost Tesla’s slumping sales and introduce the automaker’s self-driving technology in its second-largest market in the face of fierce competition.

His second trip to the country in less than a year included a meeting Sunday with Chinese Premier Li Qiang, who hailed Tesla as a “successful model” for US-China cooperation.

The head of Tesla ( TSLA ) is in town to seek Beijing’s approval for the launch of its Self-Driving (FSD) software in China and the transfer of its data abroad, according to a Reuters report.

Almost all Teslas have a driver assistance system called Autopilot, while the more robust FSD feature comes at a premium. Autopilot is available in China, but not the full FSD feature, which has to comply with national data security regulations.

Musk appeared to have made progress on his goal during the two-day trip, which ended on Monday.

On Sunday, the China Association of Auto Manufacturers said in a statement that Tesla’s Model 3 and Y vehicles had passed China’s data security requirements.

His car has previously been banned from entering some sensitive areas in China due to data security and espionage concerns. And since 2021, the company has been required to store local user data at facilities in the country as it faces scrutiny over whether its cars could be used for spying.

Tesla has also reached an agreement with Chinese technology giant Baidu (BIDU) to form a partnership on mapping and navigation functions ahead of plans to use the FSD system, according to a Bloomberg report.

CNN has reached out to Tesla. Baidu declined to comment.

Tesla shares gained more than 6% on Wall Street in pre-market trading, while Baidu shares closed up 2.4% on Monday in Hong Kong. Tesla shares have fallen 32% so far this year.

A competitive market
Musk’s trip coincides with the Beijing Auto Show, which opened last week, where global and Chinese EV makers showcase their latest models and compete for consumer attention and attention in the world’s largest EV market. Tesla has recently made more aggressive price cuts in China and other key markets in the face of declining sales and increasing competition.

“This is an important moment for Musk and Beijing at a time when Tesla has faced significant domestic EV competition in China along with softer demand,” said Dan Ives, managing director and senior equity research analyst for Wedbush Securities.

He said making FSD available in China has been a “key missing piece of the puzzle” for Tesla’s autonomous technology. But that’s not all.

If Musk can get approval from Beijing to transfer data collected in China overseas, according to Ives, it would be a “game changer” in terms of accelerating training of his algorithms for his autonomous technology globally.

“We also believe this trip will be important for Tesla and Musk to further strengthen its EV footprint in the Chinese market at an important time,” he said.

Musk’s trip comes just days after US Secretary of State Antony Blinken wrapped up a trip to Beijing to meet Chinese President Xi Jinping as the two countries try to stabilize relations.

Deeply integrated
Premier Li was full of praise for Tesla, which competes with China’s BYD for the title of world’s best seller of battery electric cars.

“The economies of China and the United States are very integrated,” he said, according to the official reading of the meeting with the Tesla CEO. “You have me, and I have you. Both sides can benefit from each other’s development.”

Musk praised Tesla’s Gigafactory in Shanghai, which Li supported during his tenure as the city’s party secretary, calling it the company’s “best-performing” factory.

“Tesla is ready to deepen cooperation with China and achieve more win-win results,” Musk told Li.

Also on Sunday, Musk met with Ren Hongbin, chairman of the China Council for the Promotion of International Trade, the government-backed trade body that invited him to Beijing on this trip.

The two spoke about Tesla’s future development in China and the prospect of strengthening exchanges between the American and Chinese business communities, according to a CPPIT statement.

On Monday, Musk posted about his meeting with Li on both X, the social media platform he owns, and Weibo, the Chinese equivalent of X – where he has 2.2 million followers.

“It was a pleasure to meet Prime Minister Li Qiang. We have known each other for many years, since the early days of Shanghai,” he said while attaching a screenshot of the meeting from Chinese state media.

Musk first met Li in 2018, when Tesla signed an agreement with the Shanghai government to open a factory there. Li was then the party boss of Shanghai and was seen as a rising political star.

According to Chinese state media, Li gave major support to Tesla and allowed the US company to be the sole owner of its Shanghai factory, while all other foreign automakers were required to work with local firms.

Since then, Musk has met publicly with Li at least five times, according to state media reports and government statements.