The 2020 deal that launched Elon Musk’s Tesla to the top of the electric vehicle (EV) market is increasingly becoming a liability for the second richest man in the world — endangering the future of his other endeavors like SpaceX. Just over four years ago, the billionaire tech mogul inked an agreement with the Chinese communist government to locate core aspects of Tesla’s manufacturing operation in Shanghai.
Access to cheap materials and labor in China allowed in part for the EV company’s meteoric rise. However, with Tesla’s diminishing market share, Musk’s close relations with senior officials in the Chinese Communist Party are no longer as advantageous. U.S. lawmakers on Capitol Hill are beginning to take a harder look at Musk’s relationships in China — especially as it becomes more apparent he cannot break off his business arrangements with the communist country.
The increased Congressional scrutiny could have negative implications for Musk’s other ventures like SpaceX, an aerospace company that maintains lucrative contracts with the U.S. government. Additionally, Musk’s ownership of the social media platform X (formerly Twitter) and the possible influence the Chinese state may have over it are of concern to lawmakers.
China has shown its willingness to flex its muscles and influence over Tesla and, by extension, Musk. After several regional officials in China moved to ban Tesla vehicles from areas deemed ‘sensitive,’ Tesla announced that vehicle data collected in China would only be stored locally.
Musk has argued that Taiwan is part of China, rejecting independence claims. Last year, when Chinese President Xi Jinping visited San Francisco, Musk attended a private reception with the communist leader.
