How Tesla will Lose China and its Hype

This is an Op-Ed first that originally appeared and was published on my speculative blog the Last Futurist.

Every few years a startup comes along that is 'disruptive' with a bit of a far-fetched aggressive, arrogant and overbearing tone that gets put into its place. Years ago that was Uber, today it's definitely Tesla.

However in retribution for what America did to Huawei, Tesla will be kicked out of a China and the reasons for this are really very simple. Let's look here at the actual landscape of things.

China Will make an Example out of Tesla and It's Already Begun

China has a plan for technological supremacy and has its own pantheon of EV startups. While it was good to invite Tesla in to China at first, this is becoming a barrier to a real Chinese-centric competition in the EV space.

The Chinese Government can manipulate public opinion with its media campaigns and smear campaigns and Elon Musk is a puppet compared to their wishes. With VW surging in EV innovation in Europe and Rivian, GM and Lucid Motors surging at home, obviously Tesla will never be the same again. Again, we predicted as much many months ago.

But let's explain the mechanisms of this. China knows its EV companies will one day dominate the world. This is because China is the biggest real market for actual innovation and competition to take place. Elon Musk's showboating nature is not seen as a good role model either for entrepreneurs.

Now, even in May 2021, Tesla has limited time to get market share in China before the government takes action, experts say. The PR campaign to discredit Tesla in China began a few weeks ago.

The Chinese Government can punish companies and their consumers must follow. Tesla's violations are said to include a right to transparent pricing and to data about accidents. You will remember, Tesla dissolved its PR department in late 2020. Amid accidents, product recalls and a worsening reputation, Tesla is powerless to stop the carnage. This also as the business and investing community recognizes its stock price is in bubble territory.

Te Le, the founder of Sino Auto Insights, a newsletter that tracks China's electric-vehicle market, followed the growing public dissatisfaction with the company for weeks. In an interview with TechNode earlier this month, Te Le dismissed concerns that complaints about the company's customer service and safety bubbling up on social media would slow its sales growth.

However eventually China will have to kick Tesla out of China to make room for its nascent companies like Xpeng, Nio, Li Auto, Baidu, Alibaba, Xiaomi and so many others. There's literally no room in New China for a maverick Western brand. I personally believe this could take place as soon as 2022 or 2023.

China's PR campaigns are deadly for corporations, countries and anyone who opposes them. Just ask Australia, South Korea or New Zealand and various related corporations and sectors. Look at what happend to H&M recently. The Chinese consumer is always right, and they do what their Government wishes. I'm not sure their Government wants them to load up on Tesla product, at least not in the long run.

To say Tesla is facing scrutiny in China over safety and customer service complaints is just the western slant of the story. The truth is there is a PR campaign against Tesla and Tesla has no hope of remaining there, clouding their plans for world domination in in the mid-term. If the assault on Huawei was embarrassing to China's national pride, what will the downfall in China of Tesla say to Americans? Your time to lead the world is almost over.

"Xinhua and People's Daily have been publishing opinion pieces regularly saying that Tesla ignores the rights of consumers," Anne Stevenson-Yang, the founder of the investment firm J Capital Research in China, said in an email.

"Commentators say that Tesla has abrogated its investment commitment (14 billion yuan) and its commitment to pay taxes (2.23 billion yuan annually). The company is not meeting its sales targets," Stevenson-Yang said. She added, "Several commentators have recommended kicking Tesla out, like Google. These are not just your local op-ed writers — it's a campaign."

Tesla has no chance of dominating EV sales in China, now or ever. If you are an investor in Tesla you have to understand that the stock price is in a bubble and global competition is far more capable than even a well funded startup can be in manufacturing cars. Realistically Tesla's global market share can only decline.

China understands that by kicking Tesla out of China it's payback time for Huawei. All is fair in technology and competition. Humbling Elon Musk will be far easier for the Chinese Government than Jack Ma was. Jack Ma was a hero. Elon Musk is, well, an internet celebrity freak who happens to be American (sorry about that SNL staff).

Tesla won't be a monopoly of the pivot to EVs and AVs. It might not even be around in 10 years. Tesla's products are rushed, its expansion was overkill and its hype was not warranted even as it was a first mover. The PR campaign against Tesla was mandated at the top. It does not matter what lobbyists Tesla uses now, it's too late. The writing is on the wall. Tesla will be kicked out of China in 2022 or sometime in 2023.

As of May 2021 I assure you there is more negative press on Chinese social media about Tesla than positive, and this is only the beginning of the campaign. Elon Musk's Twitter account can't save him this time.

China cannot afford having an unpredictable company like Tesla around that stunts its own EV startups and its own world-leading transition to EV vehicles. The Western media is not even reporting the threat to Tesla truthfully. The cycle is complete, though without Chinese sales, what can Tesla even become? Cathie Wood is selling her Tesla shares for a reason, and so will the Billionaires who pumped the stock.

What you have to understand about Tesla's future in China is that it doesn't just face consumer complaints in China of battery fires, unexpected acceleration and failed software updates. It faces a tactical campaign that will end in Tesla being kicked outright from China without sales ever again.

The Western media is not even reporting the threat to Tesla truthfully. The cycle is complete, though without Chinese sales, what can Tesla even become? The Western portrayal of Tesla's woes in China isn't even honest and is a sad copy-paste from Reuters. Tesla being kicked out of China is already a thing set in motion and is as much (obvious) to anyone who understands the cold-tech war ahead. The western media's bit about a pitch about stepping up relations with regulators isn't even giving the facts from both sides. In China, the Government's will is law and its consumer is its weapon.

Tesla simply has no long-term future in China. Tesla executives can attend all the policy discussions they want with Chinese regulators, they simply don't understand their place in China's long-term vision for the future of EVs. Just as Uber's fate before them, it's just ridiculous to imagine China will allow Tesla to keep selling their vehicles in China in any long-term sense.