Elon Musk baits Trump to attack China over Tesla factory deal

PUBLISHED : Friday, 09 March, 2018, 5:02am
UPDATED : Tuesday, 03 July, 2018, 8:22pm

Tesla’s Elon Musk just engaged in a little lobbying-by-tweet after months of battling Chinese government officials over terms to build a factory in the country. And Trump took the bait.

Trump read off Musk’s post just hours earlier noting that China charges a 25 per cent import duty on cars, 10 times the 2.5 per cent levy the US puts on China-built vehicles.

“That’s from Elon, but everybody knows it,” Trump said. “They’ve known if for years, they never did anything about it. It’s got to change.”

“Do you think the US & China should have equal & fair rules for cars?” Musk wrote Thursday to President Donald Trump, in response to a post by the president a day earlier.

“I am against import duties in general, but the current rules make things very difficult,” Musk tweeted. “It’s like competing in an Olympic race wearing lead shoes.”

The tweets hint at Musk’s frustration over struggling to get a deal done with Shanghai’s government to assemble cars there. An agreement hasn’t been finalised because the two sides disagree on the ownership structure for a proposed factory. China’s central government is pushing for the plant to be a joint venture with local partners, while Tesla wants to own the factory completely, sources with direct knowledge said.

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Import duties and the difficulties Tesla has had avoiding them by producing in China is keeping the company from fully taking advantage of the world’s biggest market for cleaner cars. Sales of battery-electric, plug-in hybrid and fuel cell-powered autos could surpass 1 million units this year, according to the China Association of Automobile Manufacturers.

China requires overseas automakers to form joint ventures with local manufacturers in which the foreign companies are capped at 50 per cent ownership. The government’s aim was for its then-fledgling auto industry to benefit from technology transfer by operating along with global giants including Volkswagen AG and General Motors Co.

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The National Development and Reform Commission said in June 2016 that China was looking into lifting the 50 per cent ownership cap. The US Chamber of Commerce has criticised the policy for limiting market access. Supporters of the rule say it gives China’s automakers a chance to better develop technology that will be capable of withstanding global competition.

“We raised this with the prior administration and nothing happened,” Musk wrote, after tweeting at Trump about both the import duties and joint-venture ownership rules. “Just want a fair outcome, ideally where tariffs/rules are equally moderate. Nothing more. Hope this does not seem unreasonable.”

Trump and Musk have a rocky history. The Tesla chief executive officer served on two White House advisory councils before stepping down in June after the president announced he would pull the US out of the Paris climate accord.

But last month, Trump tweeted his congratulations to Musk following a successful launch by Space Exploration Technologies Corp, another one of Musk’s companies.

The president praised SpaceX again just hours before Musk’s tweets. When addressing reporters in the White House, he gushed about the company launching the Falcon Heavy, the world’s most powerful rocket in 45 years, and landing two of its spent boosters back on the Florida coast.

“I don’t know if you saw last - with Elon - with the rocket boosters where they’re coming back down,” Trump told reporters. “To me, that was more amazing than watching the rocket go up, because I’ve never seen that before. Nobody’s seen that before, where they’re saving the boosters, and they came back without wings, without anything. They landed so beautifully.”