Tesla (NASDAQ:TSLA)
Concerned about being caught in the crossfire as the world’s two biggest economies drift apart, some businesses are taking action. Others are increasing their lobbying efforts to protect themselves from damage while diversifying their businesses or moving to more hospitable places. One of the companies navigating these murky waters is Tesla (NASDAQ:TSLA), which recently spurred Elon Musk to make his first trip to China since the Giga Shanghai launch event in January 2020 (remember the dancing moves?). As a result, Tesla stock surged this morning.
More than half of Tesla’s worldwide production originates in China, making it the company’s most important market outside the United States (22% of sales). Export regulations, data security, and limits on sensitive technology are all factors that may affect a company’s financial line and its ability to expand into new markets. Before early 2021 (and later in 2022), Teslas were barred from Chinese military facilities and housing compounds. Several guarantees about the driving information gathered by cameras placed into its cars will need to be provided.
Musk was overheard telling Chinese Foreign Minister Qin Gang, “The interests of the United States and China are intertwined, like conjoined twins, who are inseparable from each other.” He had dinner with Zeng Yuqun, chairman of major battery producer CATL. He met with China’s ministries of commerce and industry. After Musk arrived in Beijing on Tuesday, Tesla stock jumped more than 4%, sending the stock over $200 for the first time since March. However, Tesla (TSLA) still faces stiff competition from Chinese rivals like BYD (OTCPK:BYDDY), as well as soaring rates on auto loans amid an EV price war, as noted in SA analyst Wright’s Research in Tesla: Prepare For A Macroeconomic Storm.
Strategic planning for Tesla’s expansion into China is essential for the company’s near-term success. Still, CEO Elon Musk already has a lot on his plate with SpaceX and the newly purchased Twitter. According to Fidelity Investments, which contributed to financing Musk’s $44 billion acquisition of the social media network, Twitter is now worth just $18 billion, or around one-third of what Musk spent. Suppose Twitter doesn’t comply with the European Digital Services Act, which enters into force at the end of August. In that case, France has threatened to ban it throughout the EU.
Featured Image: Unsplash @ Brecht Denil
