Elon Musk pledges Tesla to China’s 'core socialist values' to avert EV price war

Beijing calls for an end to the price war among top EV makers following Tesla’s price reductions in the face of increasing competition.
Shubhangi Dua
Elon Musk addressing at the World Artificial Intelligence Conference 2023 in Shanghai
Elon Musk addressing at the World Artificial Intelligence Conference 2023 in Shanghai

VCG/VCG / Getty Images 

China’s government has solicited a truce among its top EV manufacturers, with Elon Musk’s Tesla being the only foreign firm to sign the joint letter committing to the country’s “core socialist values”.

Reported by the FT, Tesla’s CEO Elon Musk, along with 15 other automakers, including BYD (Tesla's biggest Chinese rival), signed the joint letter at a motor conference in Shanghai on Thursday. The contents of the letter align with China’s ruling Communist Party and President Xi Jinping. 

The Chinese Ministry of Industry and Information Technology constructed a joint letter targeting unfair fluctuating prices for the leading EV makers in the world’s largest car market. 

'Reckless' price-cutting

A senior inspector in the Ministry, Miao Changxing said, “China’s car industry needed to avoid “reckless” price-cutting.”

Additionally, the letter cited Tesla’s business navigation in an increasingly tough US-China business landscape as well as rising competitiveness in China, the world’s biggest EV market.

The move comes as governments around the world look to achieve net zero emissions targets and tackle the emerging climate crisis through more sustainable technology.

The battle between the EV companies began last year in October when Tesla slashed prices on its Model 3 and Model Y due to the rising competition in the market.

Tesla and BYD, backed by business magnate and investor Warren Buffett, emerged as the primary beneficiaries who continued to experience surging sales while smaller rival firms suffered a decline in numbers. 

The FT notes that both Tesla and BYD documented record sales in the second quarter or 2023.

Watch what David Welch of Bloomberg News made of it all:

Musk became one of the richest people in the world by successfully expanding business in the West and capitalizing on the substantial increase in Tesla's stock market value during the final years of the US bull market. 

'Core socialist values'

Tesla and Musk’s commitment to China’s ‘core socialist values’ will amuse his critics and perhaps surprise some of his more right-leaning fans, particularly with regard to his 2022 description of himself as a ‘free speech absolutist’

However, Musk has claimed his values to be “socialist” in the past. In 2018, he tweeted:

“By the way, I am actually a socialist. Just not the kind that shifts resources from most productive to least productive, pretending to do good, while actually causing harm. True socialism seeks the greatest good for all.”

Now the “socialist” CEO has committed to reducing abnormal pricing and ending the “reckless” EV price war to maintain its presence in the cut-throat EV market in China.

The Twitter CEO had to refrain from tweeting during his recent visit to China as the text-based application is banned in the country.

A researcher with Human Rights Watch, Yaqiu Wang said that the pledge has undermined Tesla’s standing. She explained that the domestic authorities frequently punish those who fail to comply with China's "core socialist values."

Self-driving cars

In another nod to the Chinese regime, Musk remotely delivered a speech at the World Artificial Intelligence Conference in Shanghai on Thursday. He articulated that the car industry could potentially achieve nearly full self-driving capability later this year.

Musk said, "As long as the Chinese people decide to do well in one thing, they will, including AI."   

With the Chinese market contributing enormously to Tesla's profitability, representing one-third of its annual sales, it is perhaps not surprising that Musk has made a commitment to ensuring fair competition within the communist country, given that this is what the Chinese government wants the company to do.

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