**Tesla and Chinese Competitors Return to Price War Amid Broken Truce**
Tesla and 15 other automakers made a pledge at the China Auto Forum in Shanghai to support China’s “core socialist values” and avoid abnormal pricing. This agreement was seen as a truce in the price war between Tesla and its Chinese competitors. However, Tesla broke the truce by announcing a new cash rebate for some Chinese customers just one day after making the pledge. China’s Ministry of Industry and Information Technology expressed disapproval of the price war, calling Tesla’s price cuts “reckless.”
**China’s Emphasis on “Core Socialist Values”**
China is increasingly relying on the private sector to support its social agenda. President Xi Jinping urged private entrepreneurs and firms to share the fruits of growth as part of his “common prosperity” campaign. The concept of “core socialist values” is being promoted by regulators and failure to adhere to these values has led to reprimands for some companies. China has even required generative A.I. products to uphold these values through a security review.
**Tesla’s Relationship with China and Elon Musk**
China is a crucial market for Tesla and the home to its Shanghai Gigafactory. Tesla produced over half of its cars in China in 2022. While Tesla has been successful in China’s EV market, it ranks behind BYD, which offers affordable cars and has delivered over 250,000 cars in June. Tesla delivered 94,000 China-made vehicles, including exports. Elon Musk has shown friendliness towards China and has visited the country, meeting with Chinese officials and battery manufacturer Contemporary Amperex Technology Co. (CATL). Musk believes China has strong A.I. capabilities.
Overall, the truce in the price war between Tesla and its Chinese competitors seems to be short-lived as Tesla broke the agreement by offering cash rebates to its Chinese customers. China’s emphasis on “core socialist values” and its campaign for common prosperity are increasingly influencing private companies. Tesla’s relationship with China is crucial for its business, and Elon Musk has shown support for China’s technological capabilities.