Recently Japan’s Mitsubishi Motors withdrew from China’s Southeast Motors, Mitsubishi officially withdrew from Southeast Motors after a failed attempt to increase its shareholding. The original 25% shareholding of Mitsubishi was taken over by the new shareholder Fuzhou Transportation Construction Investment Group Co. The original shareholder Fuzhou Automobile Group and Taiwan Yulon Motor’s subsidiary Zhonghua Automobile to maintain 50%, 25% share ratio, respectively. Mitsubishi still has a joint venture Guangqi Mitsubishi, but foreign companies have withdrawn, the next completely left China may be Mitsubishi.
In the 1990s, China’s reform and opening up significantly expanded, attracting many foreign car business investment, a large number of foreign companies with technology for the market, in the form of joint ventures into China. Compared with other car companies such as Volkswagen, which never handed over its core technology, Mitsubishi, which had just entered China, not only gave the manufacturing process of its cars to China, but also gave the core technology of its engines to domestic joint ventures. For the Chinese government, the future of the auto industry is focused on electric vehicles.
U.S. electric car company Tesla is one of the very few foreign companies that can get sole ownership to enter the Chinese market, but an important thing happened back in 2017 before the stock price explosion, when Yellow River Investment, a subsidiary of Tencent, took a 5% stake to become the fifth largest shareholder. At that time not only paved the way for Tesla to enter China, but also provided funding for the then still unpopular Tesla. Beijing brought Tesla into China in order to improve the competitiveness of China’s electric vehicle industry and to establish a supply chain for premium electric vehicles.
During a visit to China earlier in the year, Tesla CEO Elon Musk spoke with government officials and praised the Chinese government for being concerned about the well-being of its people and perhaps “more responsible” than the U.S. government for their well-being. He claimed, “How can China have an equal and level playing field if it doesn’t care about human rights, and do you really see a chance for Western democracies to win?” Hua Chunying of the Ministry of Foreign Affairs also praised Musk at the time for telling the truth, and in the hearts of Chinese people who love the Party and love their country, Tesla’s image was greatly enhanced. This has resulted in a staggering 35,000 units sold, reducing the viability of local electric vehicles in China.
While Tesla is growing significantly, a woman’s big fight at the Shanghai Auto Show on April 19, protesting Tesla’s brake failure, became international news, Tesla released data to high-profile rebut the allegations, which led to a siege by Chinese officials and citizens, and Xinhua even questioned “who gave Tesla the ‘uncompromising’ bottom line? ” The overwhelming pressure caused Tesla China to finally give in and accept the investigation and responsibility for the car’s performance problems. Coincidentally, Huawei officially released its first electric car on the day after the woman’s drama, so is Tesla behind it to help Huawei enter the electric car market? Since Huawei was forced to move into the electric car market by the U.S. blockade, Tesla from the U.S. certainly bore the brunt of it. However, what really makes the Beijing authorities uneasy is that Tesla’s sales in China alone in March created a staggering 35,000 units, a trend that if not stopped, Tesla’s sales in China this year will reach last year’s global sales volume.
Faced with an electric vehicle market that is expected to reach $5 trillion in annual value by 2035, Beijing will not allow Tesla to accelerate its growth on the Chinese market. If Tesla is allowed to make a lot of money from the Chinese and develop more advanced technology, Huawei will not be able to keep up. However, Hu Xijin, the lead writer of the Global Times, posted an article arguing that it would be good to just teach Tesla a lesson, without it having to get out of China. It seems to be because the mid- and low-end EV supply chain is indeed getting bigger, but the high-end EV supply chain manufacturers are still feathering their nests and still need time. Perhaps the Beijing government just needs to keep Tesla’s sales to about 200,000 units to keep it from being driven out of business.
In an interview with CCTV broadcast on March 23, Musk said, “The future of China is going to be very bright, the size of the Chinese economy is going to be number one in the world and the future is going to be very prosperous.” He has praised “China” several times over the year, mentioning in an interview last July that “the energy in China is very strong, there are a lot of smart, hard-working people there,” and slamming Americans, especially those in Los Angeles, California and New York “He also criticized Americans, especially in Los Angeles, California and New York, for being “pretentious” and “complacent. These remarks were, of course, addressed to the Chinese government, which he acknowledged is the largest market for electric vehicles in the long run. In any case, as the confrontation between the U.S. and China continues to heat up, U.S. companies in China can only take one step at a time and keep a low profile.
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