Tesla Inc. CEO Elon Musk has been accused of using his influence to pressure Republicans into abandoning key U.S.-China investment restrictions. This move is believed to safeguard Tesla’s business interests in China, particularly its Shanghai gigafactory, which produces about 50% of the company’s global automobile output.
What Happened
Rosa DeLauro, the top Democrat on the House Appropriations Committee, stated in a letter that Musk used his influence to have Republicans scrap provisions aimed at regulating U.S. investments in China. DeLauro pointed to Musk’s extensive investments in China and alleged ties to Chinese Communist Party (CCP) leadership.
Controversy Surrounding Tesla’s Shanghai Gigafactory
The controversy centers on Tesla’s Shanghai gigafactory, which is a critical component of the company’s global operations. DeLauro argued that Musk’s actions jeopardized critical legislation to safeguard U.S. supply chains and national security, accusing him of “bullying Republicans into going back on their words.”
Musk’s Response
Musk criticized DeLauro on social media, calling for her expulsion from Congress. The incident has sparked a heated debate about the risks of U.S. investments in Chinese technology sectors and the need for stricter regulations to protect national security.
Why It Matters
Tesla has seen robust sales in China, bolstered by strong demand for its Model Y and Model 3 vehicles. In November, the company’s retail sales in China reached 73,490 units, showing a significant recovery from earlier challenges in 2024. The EV giant also faces stiff competition from local players like BYD Co., which leads the market.
Tesla’s Financial Performance
Tesla reported third-quarter revenue of $25.18 billion, marking an 8% year-over-year growth. While the company missed Wall Street estimates, automotive revenue reached $20 billion, up 2% year-over-year. DeLauro’s accusations highlight broader concerns about the risks of U.S. investments in Chinese technology sectors.
Price Action
Tesla’s stock declined by 3.46% on Friday, ending the session at $421.06. Despite this drop, the company’s shares have surged 69.5% since the start of the year, significantly outpacing the Nasdaq 100 index. The latest ratings from Baird, Mizuho, and Goldman Sachs have established an average price target of $446.67, suggesting an upside potential of 5.53%.
Analyst Ratings
The analyst ratings for Tesla are as follows:
- Average price target: $446.67
- Upside potential: 5.53%
Conclusion
The controversy surrounding Elon Musk’s alleged pressure on Republicans to drop US-China investment protections has sparked a heated debate about the risks of U.S. investments in Chinese technology sectors. As Tesla continues to navigate the complex landscape of international trade and investment, the company’s financial performance and stock price will be closely watched by investors and analysts alike.