China’s Sweet Deal for Elon Musk: The Risks and Repercussions of Granting Special Privileges to Set Up a Tesla Plant in the Country

Elon Musk, CEO of Tesla, was granted special privileges by the Chinese government to set up a Tesla plant in the country. This move has left him vulnerable to leverage from Beijing, according to critics. The New York Times reported that Musk’s close relationship with China’s government has been described by former Tesla employees, diplomats, and policymakers.

In 2019, China offered concessions to facilitate the construction of the Tesla plant in Shanghai. Among the perks offered were low-interest loans, a new emissions credit policy that benefited Tesla, and changes to ownership rules that allowed Tesla to set up without a domestic partner. As a result of these incentives, the Shanghai plant now accounts for over half of Tesla’s global deliveries.

However, with China building its own strong EV industry, Tesla is facing challenges in the market. US lawmakers have raised concerns about Musk’s dependency on China, especially considering his ownership of SpaceX, a satellite company with valuable Pentagon contracts. Musk has emphasized that his companies are separate entities but has shown support for China on various issues including Taiwan.

Tesla, SpaceX and Musk have not provided any comment to The New York Times regarding this matter while Business Insider also reached out for comment but received no response yet.