Tesla’s electric cars were recently added to government procurement lists in the eastern coastal areas such as Shanghai and Jiangsu Province.

One China analyst told The Epoch Times that the Chinese Communist Party (CCP) is giving Tesla special treatment because the regime wants to acquire the carmaker’s battery technology, which could alleviate production bottlenecks in Chinese electric vehicles (EVs).

Tesla’s stock price rose 25.88 percent in the first week of July, and its market capitalization increased by $163.32 billion, according to Chinese financial media. This comes after some local authorities expanded their Tesla brand acquisition.

On July 5, Shanghai’s Lingang Special Area Investment Promotion Service Center posted on its official Weibo account that several local state-owned enterprises, including the City Investment Xingang Group and the Lingang Investment Holding Group, purchased Model Y vehicles produced by Tesla (Shanghai) Co., Ltd., for corporate use.

The government procurement website of Jiangsu, a coastal province adjacent to Shanghai, also announced on June 6 that among the 56 shortlisted car companies for the 2024—25 electric vehicle suppliers list, Tesla was the only foreign electric car brand listed.

China analyst and U.S.-based economist David Huang told the Chinese edition of The Epoch Times that the CCP’s decision to add Tesla cars to an approved government procurement list has “symbolic significance.”

“For some time to come, the CCP will adopt a strategy of not suppressing Tesla,” Mr. Huang said, adding that he believes Tesla CEO Elon Musk may have reached a deal with Beijing that would allow the company to bypass the CCP’s stringent scrutiny of foreign products.

Last year, Tesla suffered sales setbacks in China due to multiple pressures, such as fierce competition in the Chinese auto market and the CCP’s curbs on Tesla sales over concerns about data security and that its technology—particularly the Starlink internet service found in some Tesla vehicles—could be used to break the communist regime’s internet blockade.

Tesla Enhances Corporation With China

On April 28, Chinese Premier Li Qiang met with Mr. Musk in Beijing and said that foreign companies are “indispensable” to China’s development, praising Tesla as a successful example of trade cooperation between China and the United States, according to state-run media.

Mr. Musk said Tesla is willing to deepen its cooperation with China to achieve more win-win results.

On the same day, the China Association of Automobile Manufacturers issued a notification saying that 76 models from six car makers, including Tesla, had met the regulator’s requirements for automotive data security, which involves facial recognition data, cabin data, and personal information about the vehicle’s owner.

In November 2023, before the APEC summit in San Francisco, CCP leader Xi Jinping said he supported Tesla’s development in China when meeting with executives of major U.S. corporations, including Mr. Musk.

Mr. Musk responded that Tesla had been in the Chinese market for about 10 years and anticipated working with China to develop new energy vehicles, and make advancements in energy storage, artificial intelligence (AI), and other fields.

According to Mr. Huang, Tesla was recognized by CCP regulators as having met the standards, which is seen as removing some of the obstacles to Tesla’s full-self-driving technology (FSD) landing in China.

The expert said Tesla may have received approval from Chinese regulators after meeting some of the conditions imposed by Beijing to handle aspects of data security, such as a mapping and navigation deal with Baidu—China’s largest online search engine.

The Epoch Times could not independently verify whether Tesla was forced to make some concessions to the CCP.

However, Mr. Huang said that Mr. Musk’s bargaining chips may be “the battery control technology.”

“Because Chinese electric cars often have quality problems such as spontaneous combustion, the Chinese side needs to address the issue of battery stability. Tesla’s advanced battery control technology can help solve this problem, so Musk has the quid pro quo to negotiate with the CCP,” he said.

Mr. Musk has contributed to the development of many cutting-edge science and technology products, including those by companies like SpaceX, Neuralink, and OpenAI, as well as the social media platform X.

There is also a risk that these core technologies may be exploited by the CCP, Mr. Huang said, referencing Beijing’s “national network” to control speech and other tools that serve to consolidate the Party’s authoritarian rule.

The Epoch Times has contacted Tesla for comment but did not receive a response by publication time.

CCP’s Tactics

According to Mr. Huang, the CCP’s approach to foreign companies can be summarized as follows: Beijing initially offers generous support, and local authorities promise favorable terms, but then the CCP employs various tactics to compel firms to comply with the Party’s directives. Ultimately, once the company’s value is depleted, it is discarded.

Tesla established its wholly owned enterprise in Shanghai in 2018 and was given free land and preferential tax rates by the local government.

Tesla’s tech has since boosted China’s EV industry. After the rapid start and vigorous development of Chinese electric cars, they have not only overtaken Tesla’s market in China but also squeezed the company’s share in the global market with their low-priced dumping.

“As Beijing has demonstrated proficiency in integrating diverse interests, Tesla is still of great value to the CCP,” Mr. Huang said.

On the other hand, he continued, “China’s cheap labor and supply chain has allowed Tesla to grow rapidly, with more than half of its cars coming from the Shanghai plant. This has made it difficult for Tesla to leave China.”