Musk risks ending up in the ‘trade war’ hot seat
Tesla’s chief executive ‘has huge skin in the game when it comes to relations’ between Beijing and Washington
Elon Musk’s “bromance” with American President-elect and China hawk Donald Trump risks being a brief encounter, a last-gasp fling. He might quickly find that power and wealth make ugly bedfellows.
In a geopolitical “love triangle,” the world’s richest man and founder of Tesla has another ardent admirer in China’s supreme leader Xi Jinping. And in the world’s second-largest economy, he holds the fate of the electric car company in his hands.
Musk’s US$2 billion gigafactory in Shanghai can turn out nearly one million EVs annually. It is crucial to the group’s global fortunes and would be an easy target if Trump launches double-digit tariffs on Chinese imports when he takes office next month.
“Musk has huge skin in the game when it comes to US-China relations, and he doesn’t need an angry China to lash out at his company because they are upset with Trump,” Dexter Roberts at the Atlantic Council think tank wrote in his Trade War newsletter.
Trump doesn’t need him to open doors to the Chinese government.
Dexter Roberts at the Atlantic Council think tank
By the numbers:
- Tesla’s China operations accounted for 22.5% of the company’s revenue last year, generating $21.75 billion.
- Last month, it sold nearly 80,000 cars, a 16% rise from October’s numbers.
Delve deeper: Trump pledged on the presidential campaign trail that he would impose 60% tariffs on Chinese imports if he was elected. Xi would likely retaliate, focusing on American companies operating in China, leaving businesses such as Tesla exposed.
Between the lines: “Tesla and Musk’s entire empire are going to be hurt [if that happens], so he may want to play a role in influencing China policy,” Roberts said.
Big picture: “[That is unlikely as] Musk doesn’t have a policy role and Trump doesn’t need him to open doors to the Chinese government. Additionally, the China hawks in his cabinet may not let Musk take charge of China policy,” he stressed.
China Factor comment: Musk might be worth an estimated $350 billion, but that might not save him in the battle of egos between Chairman Trump and Comrade Xi.