Musk Makes Surprise China Visit in Search of Tesla Revenue Boost

Tesla Inc.’s Elon Musk made an unannounced trip to China on Sunday, seeking approval for driver-assistance software that could help arrest the carmaker’s revenue decline.

The Tesla chief executive officer met with Premier Li Qiang, who as the Chinese Communist Party secretary for Shanghai helped the company set up what is now its top plant globally.

Musk was expected to meet officials about rolling out the system Tesla markets as Full Self-Driving, or FSD, a person with knowledge of the matter said. While the suite of features require constant supervision and don’t make Teslas autonomous, the company generates incremental sales in the US by charging $8,000 to buy FSD outright, or $99 a month for a subscription.

Getting the green light from China for FSD could be complicated by sensitivities around the cameras that Tesla’s driver-assistance system relies on, as well as concerns about the safety of the company’s technology.

Tesla’s vehicles have been banned from China’s military compounds and some other government venues in the past over data-collection concerns. The US’s top auto-safety regulator also just opened a probe into the company’s less-capable Autopilot system, citing 20 crashes that have occurred since December involving vehicles that received an over-the-air software update.

Read More: US Finds ‘Critical Safety Gap’ in Tesla’s Autopilot

Tesla is coming off its first year-over-year decline in quarterly revenue since 2020, having sold fewer cars even after slashing prices. The company is cutting headcount by at least 10% and looking to accelerate new models, including less-expensive vehicles, that could be ready by early 2025, if not before year-end, Musk said last week.

China’s No. 2 official met Musk in Beijing hours after the billionaire touched down in the city. Li said the nation is always open to foreign companies, adding that Tesla is a successful example of China-US cooperation, according to China Central Television.

Musk is paying a visit to China shortly after postponing a trip to India that was going to include a meeting with Prime Minister Narendra Modi. The CEO called off his journey on short notice, citing “very heavy Tesla obligations.”

Read More: Tesla Is Consumed by Chaos in Shift to Musk’s Robotaxi Dream

Musk told Li that Tesla is willing to deepen cooperation with China, CCTV said. The CEO earlier met the head of the China Council for the Promotion of International Trade, Ren Hongbin, according to the broadcaster.

Advanced driver-assistance systems are becoming increasingly common in China, where Tesla is losing share of the EV market. Many local players including Xpeng Inc., Xiaomi Corp. and Huawei Technologies Co., use such features as a selling point for vehicles.

Musk also has put more emphasis on FSD, instituting a requirement when the first quarter was ending that Tesla staff needed to demonstrate the features to every customer in North America before handing over cars.

The CEO said during Tesla’s earnings call last week that FSD “actually works pretty well without modification in almost any market,” so the company planned to release the system wherever it can get regulatory approval, including China.

“It’s just like a human — you can go rent a car in a foreign country and you can drive pretty well,” Musk said. “Obviously, if you live in that country, you’ll drive better. And so, we’ll make the car drive better in these other countries with country-specific training. But it can drive quite well almost everywhere.”

Li visited the Beijing Auto Show on Sunday and said China has a leading position in the new-energy vehicle industry, China National Radio reported. He urged industry players to maintain their competitive advantages and vowed to ensure a level playing field for foreign companies in the market.

A Gulfstream registered to SpaceX landed in Beijing at about 2 p.m. local time. Reuters reported Musk’s plans to discuss Tesla’s software during the visit earlier Sunday.

Tesla’s Shanghai factory, established in 2019, is the company’s most productive plant globally, a point Musk made to Li as he praised “the hard work and wisdom of the Chinese team,” CCTV said.

China media reported that Tesla axed all Chinese graduate offers as part of its latest round of job cuts.