It was reported by WSJ that Tesla is halting its production at its plant in China. There are multiple reasons, according to the report, but one of the main reason was due to the waves of covid infections that have been hitting its workers and suppliers in China.
This incident brings forth a more concerning problem. While covid itself was to be blamed, the bigger culprit was China’s mismanaged process of lockdown reversal. In other words, it was a human error made by the country’s top management.
If this haphard style of management continues at the top – it looks like it will for some time – one cannot but ask: What else can go wrong with Tesla in China?
For one, China can, at the flip of a whiscal switch, decides that Tesla will not be welcome any more. This is actually not that unimaginable. First of all, China has banned more than a few western companies – Google, BBC, Twitter, to name a few – although most have remain in the media domain. Secondly, Tesla cars have already been prohibited in some ‘sensitive’ areas in China.
Tesla needs China because it is the largest EV market and because Tesla has its most productive plants set in China. But China may decide that it does not need Tesla. And that, would be a huge blow to Tesla.
For now it looks safe, as Musk has tried very hard to win favors for a number of years there. Musk also enjoys a sterling reputation there, worshipped by a huge crowd like a superman. But things could be changing fast at the top, especially now that Musk owns Twitter, which is a big thorn in China’s eye. The lack of transparency and oversight at the country’s top management makes Tesla vulnerable and risky as a business. Tesla is a good company, but if Apple is any indication, which recently decides to move at least some of its production out of China, it has its inherent risks in the country.