An interior of a Tesla Model Y car at in Beijing, on February 27. - Adek Berry/AFP/Getty Images
As the world’s richest person, Elon Musk isn’t short of opportunity. From TikTok to Nissan, his name comes up time and again during potential deals across Asia, no matter how outlandish.
It’s not his Midas touch that investors are after, experts say. Rather, Musk is being pursued for his closeness to US President Donald Trump and role leading the Department of Government Efficiency (DOGE).
During a period of heightened tension between United States and China, Musk stands out as an anomaly: He is perceived as being close to the governments of both Washington and Beijing. Some, particularly in China, want him to be a bridge between cultures.
But if his new Washington bona fides are catnip for dealmakers wanting to curry favor with Trump, Musk’s proximity to the president may work against him on a major project that he’s been lobbying hard to get off the ground: the launch of Tesla’s “full self-driving” (FSD) technology in China, its second-biggest market.
“Beijing grants favors and withholds favors,” according to Isaac Stone Fish, CEO Strategy Risks, a business intelligence firm. “They have many levers over Elon Musk and Tesla.”
The Financial Times reported last week, citing two unnamed sources, that Chinese officials were mulling whether to withhold approval of Tesla’s FSD license as a bargaining chip in trade negotiations with Trump. They were quoted as saying this was the main reason why the permit had been delayed. CNN has reached out to Tesla for comment.
Besides withholding FSD approval, there is a long list of potential violations that either the central or local governments in the country could claim Tesla has committed, Stone Fish told CNN.
Rolling out FSD software in China would provide a valuable revenue boost in an ultra-competitive market riven by a brutal price war. Last April, Musk made a surprise visit to Beijing to seek government approval, which included a meeting with Premier Li Qiang.
Virtually all Teslas have a driver-assistance system called Autopilot, while the more robust FSD feature – which is what the company calls its advanced driver assistance system (ADAS) – costs around $8,000. Autopilot is available in China, but not the full FSD feature.
Upping the ante
The delay is coming as Tesla faces increasing competition in China. It claimed just 6.1% of China’s market for new energy vehicles last year, according to the China Passenger Car Association, compared to archrival BYD’s 32.5%.
Earlier this month, BYD raised the bar by adding an advanced driver assistance system for most of its models free of charge. Its proprietary “God’s Eye” system is now available in models that cost as little as 69,800 yuan ($9,555). Previously, it was limited to cars that cost three times as much.
This week, Tesla appeared to be trying to play catchup. On Tuesday, it rolled out a long-awaited update to its Autopilot software, which allowed some drivers to add a navigation feature for city driving.
Lei Xing, co-host of the China EVs & More podcast, said on Wednesday the service was “pretty good” fix for Tesla as it grapples with data security restrictions imposed by both Beijing and Washington. But it’s “nowhere near” the latest version in the US, he added.
In a January earnings call, Musk said the company was in “a quandary” because China won’t let Tesla transfer training videos outside of the country and “the US government won’t let us do training in China.”
Xing said the competition for advanced automated driving is “much more cutthroat” in China compared to the US, where Tesla is “all alone” in the field. He added it was technologically behind electric vehicle makers such as Huawei, Li Auto and Xpeng, the frontrunners in ADAS.
Still, it’s important not to underestimate Musk. Since 2014, Tesla has expanded rapidly in the world’s largest car market. It built the Shanghai Gigafactory within 10 months in 2019 as its sole owner, which was an anomaly at the time — and at a cost that was 65% cheaper than its Model 3 production plant in the US.
And earlier this month, its “Megapack” factory, which produces very large batteries used to store huge amounts of electricity, started production next to its existing factory. None of it would have been possible without strong political and institutional support.
Direct ties with China
It’s precisely because Musk is “particularly well-liked in China,” that the billionaire “can serve as a bridge between China and the US, especially given Trump’s strong trust in him,” Wang Yiwei, director of the Institute of International Relations at Renmin University of China in Beijing, told CNN.
That’s why Vice President Han Zheng met with Musk when he attended Trump’s inauguration, he said. He added that Musk’s link to China could be particularly useful for Trump, who “wants a more personal connection with President Xi [Jinping]” without “dealing with Chinese bureaucrats.”
“Given Musk’s direct ties with Xi and China, he could serve as a valuable link in this regard,” Wang said.
But not everyone is sure to what extent Musk can influence Trump’s China policy.
Trump has announced across-the-board 10% tariffs on Chinese imports and steadily unveiled a series of measures, including taxes on metals imports and his “America First Investment Policy” that target Beijing explicitly or implicitly. However, he hasn’t fulfilled his campaign promise to impose upwards of 60% tariffs on the country, even after vowing to get tough on China on this first day in office.
Trump’s entire economic and trade team, composed of adviser Peter Navarro, Commerce Secretary Howard Lutnick and Treasury Secretary Scott Bessent, all take “a hardline stance on economic relations with China,” said Wu Xinbo, director of the Center for American Studies at Fudan University in Shanghai.
The professor, who sits on the Chinese foreign ministry’s policy advisory board, said Musk can be “an effective communicator” between both sides because he has “direct connections with senior Chinese officials and business leaders.”
Musk, he said, can argue from the perspective of his business operations in China, emphasizing that continued economic engagement benefits American companies by leveraging China’s market and manufacturing capacity.
The billionaire’s special position, with close ties with Trump and to Chinese officials, could have an adverse effect on a key part of his business empire as Tesla fights against being overtaken in China.
CNN’s John Liu contributed reporting.
For more CNN news and newsletters create an account at CNN.com
