Why was Elon Musk really in China?

Elon Musk’s trip to China last week was intense and probably fruitful – such that the Financial Times quips “In just two days this week, Elon Musk had more top-level Chinese meetings than most Biden administration officials have had in months”. 

During the 44 hours, Musk met 3 Ministers, Party chief of Shanghai, and maybe a Vice Premier. He had dinner with guests including Zeng Yuqun, Chairman of world’s largest EV battery maker CATL, and rallied the Tesla team at Shanghai gigafactory late at night. 

It is not hard to understand why the Chinese government put such a high profile on the visit. It needed to tell the world that China was open for business, boost domestic and global businesses’ confidence in its economy, and leverage business leaders’ lobbying power to alleviate the political pressure amid the current China-US tensions. 

Why is China important for Tesla

For Musk and Tesla, China has become very important both as a market and a manufacturing hub for Tesla. 

In April 2023, more than 1/3 of the passenger vehicles sold in China ran on new energy. By the beginning of May, Tesla had set up >1600 supercharging stations, >10,000 supercharging piles and >700 destination charging stations on Mainland China.

Also, in Apr 2023, Tesla Shanghai Gigafactory delivered 75,842 vehicles – that’s 1 car every 34 seconds. 

The Shanghai factory broke many records – the first being 11 months from starting the construction to the first car rolling off the production line. 

A cluster of suppliers is also forming near Tesla’s Shanghai factory, further enhancing the efficiency. The factory is also ideal for exports, as it is only 40 minutes drive from one of China’s largest ports:

Exporting the culture 

Musk is apparently satisfied with the performance of the Tesla team in China. He praised the worth ethic in Chinese manufacturing in interviews multiple times over the past two years. 

Tom Zhu, VP Greater China who led the construction and operations of Gigafactory Shanghai, was promoted to SVP Automotive in April 2023, overseeing the entire car business and joining the four-person executive leadership team (including Musk). 

Earlier in Dec 2022, Musk sent Zhu on a trip to fix production bottlenecks in the US, a trip during which the Texas gigafactory hit 3k Model Y builds a week. Still way below Shanghai’s levels and a major achievement nonetheless. 

Musk also tried to export some of the work ethic to Twitter, the social media company he had acquired for US$44 billion last year. That proved highly controversial – as the Silicon Valley company had a very different culture compared to Tesla’s. 

That caused some severe turbulence. Almost 80% of the employees left, and the media predicted the doom of Musk’s Twitter multiple times. 

It took Musk a few months of diverted attention (from Tesla – to the chagrin of its shareholders) to stabilise Twitter. The worst seems to be over and now an ambitious CEO Linda Yaccarino is taking over. 

Lesson for leaders 

Musk’s endeavours in China and Twitter are similar to the experiences many other leaders face while venturing into a new territory, being a market or a new business. 

Leadership will also need to pick, sustain and motivate the right people and the right organisational structure to support their ventures.

In a way, it is the strong people such as Tom Zhu and SpaceX’s COO Gwynne Shotwell (and perhaps Lina Yaccarino moving forwards) that have allowed Musk to venture into so many different companies, yet still maintain the mental space to improve products, and solve bigger problems.

While China has been a difficult market for western tech companies (LinkedIn became the latest casualty recently), leaders such as Musk, Apple’s Tim Cook and (to a certain extent) Uber’s Travis Kalanick understand dearly the importance of the market, and have taken actions to put the right people / organisation in place for success. 

Let’s just hope that the geopolitics will not get too much in the way, but we are sure real leaders will have the right grit and dedication to succeed, no matter the obstacles.

Oh, in a true Chinese fashion, the next day of Musk’s dinner in Beijing, the restaurant already received enquiries about booking copycat banquets with exactly the same menu.