Elon Musk's three visits to China

In Beijing in May, Elon Musk landed again. For him, this land is both familiar and strange. It's familiar because Tesla's Gigafactory is still in operation, and strange because every time he comes, the Chinese automotive industry has transformed into a different landscape.

Tesla was the first foreign catfish to swim into this deep sea. Now, it is surrounded by the fish schools it has spawned.

Arrived Too Early

On April 22, 2014, at Hengtong Business Park in Jiuxianqiao, Beijing.

At the age of 43, Elon Musk, as the CEO of Tesla, stepped onto the stage and handed over the keys of the Model S to the first batch of Chinese owners. The list was quite impressive: Cao Guowei, Yu Yongfu, and Li Xiang. Among the early Tesla owners in China were also Lei Jun and He Xiaopeng.

It was a typical Musk-style ceremony for entering the Chinese market: full of a sense of technology, star power, and an elite atmosphere.

At that time, Musk was already the most sought-after entrepreneur in Silicon Valley. PayPal gave him the aura of a serial entrepreneur, SpaceX endowed him with the charm of a real-life sci-fi hero, and Tesla turned this charm into a consumer product. To enter the Chinese market, Tesla poached executives from Apple and Bentley's Chinese divisions in advance, launched pre - sales with high - profile, and even collected a deposit of 250,000 yuan. The headquarters was soon spurred by the market enthusiasm and raised the delivery target for the Chinese market in 2014 from 3,000 to 10,000 vehicles.

It soon proved that Tesla came to the right place but too early.

That year, the actual number of Tesla vehicles registered in China was only 2,499, failing to meet even the most conservative internal target. Musk later admitted that the sales performance in the Chinese market was "surprisingly weak".

In 2014, China did not accept Tesla as a "new species". At that time, the annual penetration rate of new energy vehicles in China was less than 0.5%, and the total sales of pure - electric and plug - in hybrid vehicles were only a little over 70,000. The general public's understanding of "electric cars" was mostly limited to low - speed electric vehicles. The charging network was far from perfect, and range anxiety was a real issue. Almost every aspect, including maintenance, vehicle depreciation, sense of security, and consumption habits, was not ready. Even the new energy vehicle license plate policy in Beijing faced the embarrassing situation of more available quotas than applicants in the early stage of implementation.

In other words, when Tesla first entered China, it faced an untapped market that had not been fully educated.

But this doesn't mean it left nothing behind.

On the contrary, Musk's first appearance in China successfully promoted a vision of future cars: electrification, intelligence, direct - sales model, and software - defined vehicles. Jia Yueting, who was willing to "suffocate for his dreams", established an automotive project team and took charge of it himself that year; Li Bin convinced Liu Qiangdong to invest in NIO in just 15 minutes; and Li Xiang soon stepped down as the president of Autohome and started building cars.

In 2014, Musk failed in the market but won in another dimension. He didn't immediately conquer the market, but he ignited it.

The Chinese Savior

On January 7, 2020, in Lingang, Shanghai.

At the delivery ceremony of the domestically - produced Model 3, Musk danced the dance that later became widely known. Even when the music stopped, he kept dancing; when the music resumed, he got more and more excited and finally threw his suit jacket onto the stage.

Before this, Tesla had been struggling in the "production hell" for too long.

Around 2018, the mass production of the Model 3 was not going smoothly, the cash flow was under pressure, and the patience of the capital market declined rapidly. Short - selling institutions lingered, and the media continuously magnified the signals that Tesla might fail. At that time, Musk relied on sleeping pills to relieve insomnia, and his life was consumed by work. For an automobile company, technological leadership doesn't guarantee safety; production capacity, delivery, and cash flow do.

And at this moment, China gave Tesla the most crucial support.

The speed from the establishment to the production of the Shanghai Gigafactory exceeded Musk's expectations and also went beyond the common understanding of the construction cycle of large - scale factories in the global manufacturing industry. More importantly, what China offered to Tesla was not just speed. The opening - up of sole proprietorship, land support, financing convenience, supporting systems, construction efficiency, and coordinated approvals... The concentrated output of a whole set of systematic capabilities enabled Tesla to transform an empty plot of land into a factory that could deliver vehicles, recover cash, and generate profits in a very short time.

This is a very typical choice of the Chinese industry. China needed a real catfish to enter the domestic market: it had to be strong enough, fast enough, and have a strong benchmark effect to force domestic automakers and the supply chain to speed up simultaneously.

The Shanghai Gigafactory pulled Tesla out of the ICU. Its cost, efficiency, delivery capacity, and profit structure were all reshaped here. The Shanghai factory was one of the turning points for Tesla to become the most important profit - making machine in the global electric vehicle industry. In 2020, when Musk showed off his dancing skills, Tesla achieved annual profitability for the first time, with a net profit of 721 million US dollars. The production line cost of the Shanghai factory was 65% lower than that in the United States.

But for China, what really matters is that it accelerated the industry with the help of Tesla. The catfish swam into the pond.

Surrounded by the Fish School

At the end of May 2023, Musk's private jet landed in Beijing again.

Compared with the previous two visits, the atmosphere of this visit to China was completely different. On the surface, he was still the most prominent entrepreneur; the talks in China achieved positive results, and the capital market quickly gave a positive response. Tesla's stock price rebounded, and Musk returned to the position of the world's richest man. It seemed that he was still in control.

But if we look at the industry perspective, we can see another reality: In 2023, the sales volume of new energy vehicles in China was close to 10 million, domestic brands dominated the market, and the penetration rate exceeded one - third. BYD caught up with and surpassed Tesla in pure - electric vehicle sales, and Li Auto established its dominance in the high - end SUV market. More and more Chinese automakers began to have three capabilities simultaneously: faster product definition, stronger cost control, and a faster iteration speed that was more in line with Chinese consumers.

This means that what used to be Tesla's most valuable assets are being disassembled one by one.

Others now have the leading electrification capabilities; Chinese automakers have quickly learned the minimalist but efficient supply - chain management; Chinese domestic manufacturers are even more aggressive in the price war in terms of cost systems; and the intelligent experience that once impressed consumers is no longer exclusive to Tesla. The high premium that Tesla used to enjoy due to its leadership is being squeezed by increasingly strong competitors.

The system that Tesla helped to mature, along with the grown - up domestic automakers, has pushed Tesla into a different kind of competition.

There is a classic saying: When the second car in the world was built, motorsport had already begun.

This article is from the WeChat official account "Yunjian Insight", written by Wang Hailu and Liu Yimo, and published by 36Kr with authorization.