Li Qiang meets Elon Musk, raising hopes for Tesla's self-driving bid

Grace Tao, Tesla's vice-president of external relations in China, wrote a commentary piece in China official newspaper People's Daily on Friday, saying that autonomous driving is a key growth driver for the country's new energy vehicle sector, arguing that the technology will hatch new business models such as robotaxis, a vision that Musk has embraced.

Musk's latest visit to China coincides with the 2024 Beijing Auto Show, which kicked off on Thursday and runs through Saturday. The event has this year attracted more than 1,500 exhibitors, with the biggest names showing off their latest EVs. Tesla does not have a booth at this year's show, the second consecutive year that it missed having a presence at the tentpole industry trade show in the world's largest automotive market.

Musk has enjoyed the red carpet treatment during his previous China visits. In 2019, Tesla was allowed to drive cars into the Zhongnanhai compound, the living and working area of Chinese leaders, when former Premier Li Keqiang hosted the CEO, and during Musk's three-day visit to Beijing last June he was received by then Chinese foreign minister Qin Gang.

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During that visit Musk also met with Chinese vice-premier Ding Xuexiang and China's commerce and industry ministers. The trip was warmly received by the Chinese public, with social-media posts focusing on the Chinese food Musk ate, and some referring to him as a "pioneer" and "brother Ma".

Tesla, the leader in China's premium EV segment, delivered 603,664 Model 3s and Model Ys made at its Shanghai Gigafactory to buyers in China last year, an increase of 37.3 per cent over 2022. The growth rate matched the 37 per cent rise in sales recorded in 2022, when it delivered about 440,000 vehicles.

Tesla has sold more than 1.7 million cars in China since it entered the market in 2012, and located it biggest factory in Shanghai, where Musk enjoys high levels of political support for the project. In a sign of its further commitment to China, Tesla bought a parcel of land in Shanghai to build a factory with a planned annual capacity of 10,000 Tesla Megapack batteries, which are used for battery storage stations.

Chinese EV makers have tried to lure consumers with improved assist-driving functions, such as city and highway autopilot navigation and smart parking. China is expected to be the biggest connected car market, followed by the US, India, Japan, and Germany, with electrification, autonomous and advanced infotainment capabilities being the major drivers for growth of the segment, according to a report from research firm Counterpoint.

However, driverless vehicles are still more of a dream rather than reality in China, where most high level self-driving robotaxis are only allowed to operate in designated suburban areas where traffic conditions are much less complex than in cities.

Autonomous car companies have been struggling to eke out a profit in China due to heavy operating costs and low revenues from maintaining large robotaxi fleets. Baidu, which has robotaxi fleets in several cities, said its self-driving unit will focus on generating revenue and profits after burning cash for years. Smaller players such as WeRide and Pony AI have joined bigger carmakers to try and monetise services as they continue to operate robotaxis at a loss.