China has long been an important market for Tesla and for Elon Musk, but with the new US tariffs and rising competition in the electric vehicle market, Tesla may be on the outs in China. Today on the show, we’re joined by senior writer Zeyi Yang to talk about what this means for Elon Musk’s company.
Mentioned in this episode:
DOGE Is Building a Master Database to Surveil and Track Immigrants, by Makena Kelly and Vittoria Elliott
Stumbling and Overheating, Most Humanoid Robots Fail to Finish Half-Marathon in Beijing, by Zeyi Yang
You can follow Zoë Schiffer on Bluesky at @zoeschiffer and Zeyi Yang on Bluesky at @zeyiyang. Write to us at uncannyvalley@wired.com.
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Transcript
Note: This is an automated transcript, which may contain errors.
Zoë Schiffer: Welcome to WIRED’s Uncanny Valley. I’m WIRED’s director of business and industry, Zoë Schiffer. Today on the show, Tesla’s troubles in China and what it means for Elon Musk’s wallet. We’re going to talk about how China is the biggest electric-vehicle market in the world and has played a major role in Tesla’s growth. But with the US tariffs and rising competition in the country, China may just be done with Tesla. We’ll see. I’m joined today by Zeyi Yang, senior writer at WIRED. Zeyi, welcome to the show.
Zeyi Yang: Thanks for having me, Zoë.
Zoë Schiffer: Tesla is scheduled to release its first-quarter earnings today, after a pretty grim quarter for the company’s stock price. What are we expecting to see from these results? Because we’re recording a few hours before they actually come out.
Zeyi Yang: Exactly. I’m also looking for the result too. But I think we already know that Tesla sales has doing pretty bad in Europe. It may have also been bad in the USA. Really, China may have been one of the last markets where its sales are still doing relatively OK, but we’re about to find out. I think from what I saw, the data collected by Chinese industry associates, they’re saying that Tesla’s doing still OK this year, mostly because they released a new model of their car. But if not for that, maybe it would have went down, too.
Zoë Schiffer: Let’s take a bit of a step back, because China has been a really important market for Tesla and for Elon Musk generally. He’s a celebrity there, and so is his mom, as you’ve reported.
Zeyi Yang: Yes, she is.
Zoë Schiffer: Can you talk to me about that relationship? And also, what is Tesla’s standing like in China? Is it viewed as a popular, cool car still?
Zeyi Yang: It’s still sort of, because for the longest time, Chinese auto brands have been seen as inferior to foreign brands. Tesla still has that halo as this American electric car company. But it’s losing it as we speak. Also, when we talk about the relationship between Tesla and China, sometimes I forget how far back it dates. There’s one very interesting figure we have to talk about. His name is Zhuanglong. He used to be Chinese minister of industry and information technologies. Basically, the chief ministry of innovations in China. He went to San Francisco in 2008 and tried one of the roadsters, one of the first electric cars that Tesla made. Because he came from the auto industry, he was an electric car nerd. That’s how this all started. Then, from Musk’s very first visit to China in 2014, he met this guy again. He really tried to push for it to sell his car in China, and later we know he built a Gigafactory in Shanghai in 2020. That’s a long history of how Musk and Tesla entered China. But what we know for now is that China is one of the most productive facilities for Tesla. It’s also one of the biggest market for Tesla. Tesla absolutely cannot lose China.
Zoë Schiffer: That’s fascinating, because we know with other tech companies like Google and Meta, they tried really, really hard to get into China and weren’t quite as successful, or completely failed in some cases. But Elon Musk was able to prevail. Do we know why that was?
Zeyi Yang: I think it helps that he’s working on a car company instead of a social media company, because there’s just so much control over information and the internet in China. Whereas if you’re just making a car, it doesn’t really go across those red lines that China has. Also, it just helps that China, for the last two decades, has really been thinking, “Maybe I should be betting on electric vehicle as the future of transportation too.” It did welcome Tesla to be a part of its grand experiment, and also investment to build up an EV empire. That’s why Tesla become a very central part of it and contributed to what China has achieved so far.
Zoë Schiffer: Well, that leads right into my next question, because China has invested really heavily in electric vehicles. In part, I think, to reduce its dependency on foreign oil imports. How is that going so far?
Zeyi Yang: It’s going pretty well, I will say. Yeah. China does not have rich oil reserve, and it has been importing oil from a lot of other places for the longest time. That’s why the Chinese government has always been very careful about that, because if, for example, a World War III happens, those oil supply are going to be cut off. What is it going to do? I think in the early days, I will say the early 2000s, the idea of electric vehicles was this moonshot idea. Where they were thinking, “Maybe, if one day all the cars will be powered by electricity, then we don’t need to import this oil anymore and we’ll be much more secure if war breaks out.” That’s when they really started investing in the research of batteries and electric vehicles with college research funds. But then, that gradually led to Chinese companies building up. They heavily subsidize any car company that can make a product that gets to run on the road and customers can buy. All of that, after years of heavy spending, led to what we have right now, which is a booming electric vehicle market in China. I think the latest data says that more than 50 percent of consumers when they’re trying to buy a new car, they go for electric rather than a gas car. That’s pretty remarkable.
Zoë Schiffer: Yeah, that’s really interesting. It’s also something we’re hearing a lot about now. We’re seeing people close to President Trump saying, “Hey, look at China. They really help their homegrown tech companies, and now China seems to be beating us in key markets.” It’s this idea that perhaps the US government should have a friendlier relationship with the tech companies that are created in the United States.
Zeyi Yang: Well, I will say it’s more of a love and hate relationship between the Chinese government and their homegrown companies, because we definitely have seen the honeymoon eras where they subsidize them, where they get the domestic market and drive out all of the foreign competitors. But also, there are periods, I think around 2020, when they really cracked down on the tech companies like Alibaba and Tencent. It can backfire. The government can help you, but it can also destroy you.
Zoë Schiffer: OK. Who is Tesla’s biggest competition in the country right now? Which cars are we seeing become more popular than Tesla?
Zeyi Yang: There are so many, I will say dozens of EV brands in China right now. The leader is probably BYD, just because of its sheer size. A Chinese company that started by making batteries and small electronics, BYD now is I think the biggest electric vehicle company in the world, in terms of the number of cars they sell. Bigger than Tesla. Of course, they’re growing in China and they’re selling their cars much cheaper and in much more varieties in China. But we’re also seeing a few more electric car—I will call say “startups,” because they were funded in the last 10 years or so—but still they are big players in the Chinese market now too. They are Neo, they are Li Auto. These companies have really risen up from having nothing to become big players, pushing affordable and also capable cars to the market now.
Zoë Schiffer: When we hone in on BYD specifically, what is that car like compared to a Tesla? I guess I want your subjective opinion now. Are they better or are they just cheaper?
Zeyi Yang: I think the biggest thing is that they come in more variety. You will get a very cheap car, for example, I don’t know, a Toyota Corolla, something similar to that, but in an EV form by BYD. Or if you want a luxury SUV, you want something that you can show off to your friends, BYD offers that too. Where Tesla really only has, what, three models being offered right now? It’s hard to compete with them when you know consumers want very different things. The other thing I find really interesting is that because, I guess Chinese EV companies are already pretty confident with the quality of their cars now, they’re going for those very niche, very weird applications. They’re making cars that can run in water, like turn into a boat. They’re making cars that allow you to play computer games, and they even have a hot pot in there. Not everyone’s going to use it like that, but maybe someone will see that and be like, “I want a car that allows me to do that once in a year.”
Zoë Schiffer: Oh my gosh. Well, as someone who really liked the show Pimp My Ride on MTV when I was younger, maybe this was what I need in my life. We’ll be right back. When we return, what does this mixed economic outlook mean for Elon Musk’s wallet?
[break]
Zoë Schiffer: The outlook seems mixed for Elon Musk’s future in China, or Tesla’s future in China I should say. What does this mean for him, and specifically his overall wealth?
Zeyi Yang: I will say that, first of all, he really wants to make sure the factory in Shanghai keeps producing more cars, because it is the most productive plant in Tesla. He wants it to keep churning out cars. But if the foreign demand doesn’t catch up, then what are these cars for? We know right now it’s mostly for I would say the European market and also the Chinese domestic market. He’s proud that these factories are running 24/7. If that doesn’t happen, it would really hurt the Shanghai factory’s efficiency, and that would not be good for him.
Zoë Schiffer: Musk is in an interesting position with his business interests in China, particularly as the Trump administration gets more antagonistic toward the Chinese Communist Party. Can you talk about that a little bit? And also, how do you see that playing out?
Zeyi Yang: I think the whole development’s very fascinating. One thing I want to mention right now is that, obviously, everyone’s talking about the tariffs. The Chinese government and Chinese people hate that Trump is slapping at 145 percent tariff on Chinese imports. Musk actually doesn’t like that. He said it publicly on X, that he doesn’t think the tariffs are a good idea. That is because if you are a multinational company doing business in US and China, you are going to be impacted by those tariffs. The cars made in the Shanghai factory aren’t shipped to the United States, but maybe they’re trading car parts in emergencies maybe, or there’s some kind of business developed between the countries that will be cut off by these tariffs. That’s not good new for him. I think that’s a good example to show that, even though we know Musk and Trump are in this very close alliance, there’s still diverging interests between them. How to handle business deals with China, how to handle the private sector connections with China, that is one thing I think they will disagree on.
Zoë Schiffer: We know from other reporting that Elon tried to privately lobby Trump against the tariffs on China, and ultimately he appears to have been unsuccessful, at least so far. It’s interesting to see it play out, because these men seem very interested in their own bottom line and their own business interests. When those interests align, they get along really well, but China is this point where they seem to diverge, like you said, quite intensely. I’m curious if that will become a breaking point in the relationship, or if they’ll be able to resolve their differences.
Zeyi Yang: Yeah. The other thing I want to point out is that, for the longest time, China, both the Chinese people and the government, have really viewed Musk as one of their friends. They came here, helped us prop up the electric vehicle industry, and are still contributing a lot of tax dollars from their Shanghai Tesla factory. Now I think they’re figuring out what’s their new attitude to Musk. It’s like, “He’s still doing all of those things. His company is still contributing to our economy.” But at the same time, he’s a close ally of Trump who’s absolutely wreaking havoc on our economy. What do we see there? When I go on social media and just watch how people comment about Musk, I see a lot of mix there. There’s people who still see him as the future of technology. But then there are people who are like, “Why don’t you say something about the tariffs?”
Zoë Schiffer: Yeah. It’s so interesting. It’ll be very curious to see whether his celebrity status starts to fade. Or even, we’ve seen in the United States and Europe, if this symbol of what a Tesla means, it used to be this very cool, environmental symbol, become something different altogether. We’ve all seen those bumper stickers that are like, “I bought this Tesla before Elon Musk went crazy,” or whatever.
Zeyi Yang: Yeah.
Zoë Schiffer: I think the point where we know it’s really shifted is when Maye Musk’s popularity starts to decline, because you’ve reported that she’s an enormous celebrity in China.
Zeyi Yang: Oh, that would be a big change, for sure. I don’t see that happening yet, but maybe soon.
Zoë Schiffer: We’re going to take another short break. When we come back, we’ll share our recommendations for what to check out on WIRED.com this week.
[break]
Zoë Schiffer: Welcome back to Uncanny Valley. I’m Zoë Schiffer, WIRED’s director of business and industry. I’m joined by WIRED senior writer Zeyi Yang. Before we take off, Zeyi, tell our listeners what they absolutely need to read on WIRED.com today.
Zeyi Yang: I will say it’s the story about how DOGE is building a massive immigration database, by my colleagues Makena Kelly and Vittoria Elliott. I read the story on Monday morning when I was just coming back from work and my head was blown. I was like, “Oh, wow.” It’s connecting so many dots of our previous DOGE reporting, including some by you, Zoë. I remember when I was reading all of those previous stories, I was thinking that, “Why do they want all of this data? What is it going to be of use to them?” Now we’re finally connecting dots, like, “Hey, maybe this is what they were going for.” I think that’s a much better explainer of the whole DOGE operation to me. The last thing is that, I don’t know, there are just so many granular details in that story. Absolutely everyone should read it.
Zoë Schiffer: Yeah, I completely agree. I think one thing we were wondering from the very early days of DOGE, because we saw them sucking up all of this data, or at least accessing it in a lot of different ways. The question was why, like you said. Now we know at least one use might be to track people coming into this country.
Zeyi Yang: I have to say that, as someone from China, this is something people are always afraid of the Chinese government doing. They’re saying that, “Well, you obviously have a lot of data of the Chinese people already. Please do not connect them and build it into a central database to surveil everyone.” Now we’re seeing a similar kind of thing being built in the US, and that makes me even more scared.
Zoë Schiffer: Yeah, completely. OK. Well, my recommendation is a story that you wrote. You took your Saturday and probably some of your Friday to write about this humanoid robot half-marathon. It was a half-marathon that humans were running in, but also about 21 robots were running in. I think it was the first time we’ve seen this happen. You wrote this really charming, funny, scary at points dispatch from the race. Maybe because you’re here, you can just give us a little bit of an overview, because the robots didn’t do that well, right?
Zeyi Yang: No. Unfortunately, no. I was expecting them to do a little bit better, but no. Basically, on Saturday morning in China, this was this half-marathon race in Beijing where 21 robot teams participated. Only six of them actually finished the race, and only one of them made it into the cut of time for human athletes. From that you know they’re not doing great. But also, just the literal ways that they fall and fail, it’s hilarious. One of them, I remember so clearly. First of all, I don’t think it actually worked. It used propellers, like drone propellers to push the robot forward. It immediately lost its direction, twirled in two circles, and fell. And dragged down the human operators too, which was really, really painful. I think it’s a good example of saying that robots can do impressive things now, like for example finishing a half-marathon. But at the same time, there are a lot of problems we need to address. Definitely not every company is getting to that level.
Zoë Schiffer: Honestly, it comforts me a little bit that there are some things that they’re still worse at than humans, although I’m sure it will change soon. That’s our show for today. We’ll link to all the stories we spoke about in the show notes. Make sure to check out Thursday’s episode of Uncanny Valley, which is about protecting yourself from phone searches at the US border. If you like what you heard today, make sure to follow our show and rate it on your podcast app of choice. If you’d like to get in touch with us for any questions, comments, or show suggestions, write to us at uncannyvalley@WIRED.com. Kyana Moghadam and Adriana Tapia produced this episode. Amar Lal at Macro Sound mixed this episode. Pran Bandi was our New York studio engineer. Jordan Bell is our executive producer. Conde Nast’s head of global audio is Chris Bannon. Katie Drummond is WIRED’s global editorial director.
