Chinese officials have reportedly cooled on Elon Musk, the CEO of Tesla Inc. (NASDAQ:TSLA), as a potential geopolitical asset due to his public fallout with President Donald Trump.
What Happened: In January, Chinese Vice President Han Zheng met with Musk in Washington, expressing Beijing’s hope that Musk would play a constructive role in U.S.-China relations, according to The Wall Street Journal. However, Musk’s response was reportedly lukewarm and due to his now strained relationship with Trump, Beijing no longer sees Musk as a valuable “geopolitical asset” and is unlikely to publicly engage with him.
One of the sources, who consults with Chinese officials, stated, “Tesla remains important for China…but for authorities, helping domestic companies still matters more.” This is a significant setback for Musk, who has been focusing on Tesla’s operations in China, its second-largest market by revenue.
Nevertheless, China remains important for Tesla, especially as its sales in the U.S. and Europe have declined, partly due to Musk’s past ties with Trump. China also serves as a crucial testing hub for technologies such as Full Self-Driving (FSD) and autonomous taxis, which are among Musk’s top priorities.
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Why It Matters: Musk’s relationship with China is crucial for Tesla’s future. Despite the recent cooling of Musk’s geopolitical value, Tesla’s sales in China have seen a rise. In June, Tesla saw a 3.7% year-over-year increase in sales in the Chinese domestic market, amid declining sales in other markets.
However, Tesla continues to face stiff competition from local rivals like BYD (OTC:BYDDF), which reported its best sales performance of 2025 in June.
Despite this, Musk has found an unlikely source of support in Chinese netizens. Amid his feud with Trump, Chinese social media users have been rallying behind Musk, hailing his stance against Trump. However, the recent cooling of Musk’s geopolitical value in China could pose a significant challenge for Tesla’s future in the country.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
