The world is still trying to figure out what Elon Musk’s incredible deal to buy Twitter means for the future. However, many wonder if China will have an indirect influence over the social media platform. This is because of Tesla’s dependence on local suppliers and its Shanghai plant for its profits.
After rejecting Musk’s initial offers, Twitter’s board announced Monday that it would accept Musk’s $44 billion offer. This ended a long and frustrating wait for Musk to accept his unrequested bid. The mercurial entrepreneur stated that free speech is the foundation of a functioning democracy and that Twitter is the digital square where vital issues for the future of humanity can be debated.
China was Tesla’s largest source of vehicle production in 2021 and is likely to be its second-largest source of sales. Wedbush equity analyst Dan Ives told Forbes that lower production costs, including battery cells and materials, are also the source of electric-car maker’s profit. According to Michael Forsythe of the New York Times, China has a strict policy against public criticism and banned Twitter in 2009, as he is a long-time correspondent. Forsythe stated in a tweet that while the country had never previously been able to influence Twitter, Musk’s deal may have changed that.
Jeff Bezos, an Amazon founder, was intrigued by the question and asked: “Did China just gain a little leverage over the town square?”
Tesla was the first foreign automaker to be allowed to own its China-based assembly plant. Global giants like General Motors, Ford, Volkswagen, and Toyota had to work with Chinese companies that owned most joint-venture factories. The $1.3 billion loan from local banks, including China Construction Bank Corp. Agricultural Bank of China. Shanghai Pudong Development Bank and Industrial and Commercial Bank of China were used to fund the construction of “Giga Shanghai.” China watchers believe that Tesla was granted special dispensation because the government wanted to encourage Chinese automakers to be more competitive with the company based in Silicon Valley. It appears to have worked, as local companies like NIO and BYD have overgrown to be rivals to Tesla with various compelling electric models.
Musk, the world’s top richest man with a net worth Forbes puts at $268.2 million has demonstrated a willingness to follow Chinese government requests in ways that he doesn’t often in the U.S. His response to Covid-19 health regulations is the most striking difference. Musk resisted a local staying-at-home policy that temporarily suspended production at Tesla’s Fremont plant in California when the pandemic started in early 2020.
He stated that “to say that people cannot leave their home, and they will face arrest if they do,” in a Tesla earnings call on April 2020. This is not democracy. This is not freedom. Give people their goddamn space back.”
Musk remained silent when the company was forced to stop production at its Shanghai plant, which began in March. This was due to the Chinese government’s zero tolerance approach to halting the spread of omicron-variant covid. Under strict protocols, Tesla started building Model Ys and Model 3s last Wednesday. Workers were required to stay at the plant and refrain from returning home temporarily.
In China’s Xinjiang Province, Tesla also opened a showroom. The government is accused of running an assimilation program and operating internment camps for ethnic Uyghurs. Musk has not commented on the decision. In January, Tesla’s Chinese unit announced it via Weibo (China’s social media platform).
Many China observers point out that Elon Musk owns a Tesla factory in China. He wants to sell more cars there. What happens if Beijing tries to impose its will on Musk about the Hong Kong activist account or Uyghurs? “Or about Chinese disinformation robots leveraging that platform,” Vice News reporter Melissa Chan stated in a Tweet.
Chan tweeted, “If Elon Musk believes that because he is the world’s wealthiest man, he can tell China that it should piss off, he will find out how efficiently China can gobble-up that Tesla Shanghai factory and take with it as many IP.” China is the most influential country in linkage diplomacy.
Tesla shares closed at $876.42 on Tuesday, closing down 12%