Elon Musk got special favors and access from China that could leave him exposed, report says

• Elon Musk was granted special favors to set up Tesla plants in China, a report said.
• But it leaves him exposed to leverage from Beijing, critics told The New York Times.

China handed Elon Musk special privileges to set up a Tesla plant in the country, but it may leave him vulnerable to leverage from Beijing, The New York Times reported.

The Times on Wednesday cited former Tesla employees, diplomats, and policymakers who described Musk's symbiotic relationship with China's government.

It describes how Musk was offered concessions from the Chinese government to set up a Tesla plant in Shanghai. Construction began in 2019.

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China offered Tesla perks, including low-interest loans, a new emissions credit policy that Tesla profited from, and changed ownership rules so Tesla could set up without a domestic partner, the report said.

The plant now accounts for more than half of Teslas' global deliveries, and the company is increasingly dependent on the low costs of car production in China in a highly competitive EV market.

China is building an increasingly powerful EV industry of its own, and Tesla is on the back foot. The report said Tesla's presence in China helped to turbocharge its EV industry by stoking innovation in key sectors.

US lawmakers are concerned about Musk's dependence on China, particularly given his ownership of SpaceX, a satellite company with valuable Pentagon contracts. Musk has emphasized in the past that his companies are separate entities.

Musk has pushed pro-China lines on issues including Taiwan, the independent state off China's coast that Beijing has long wanted to seize control of, and praised the authoritarian country's leaders.

Tesla, SpaceX, and Musk did not reply to a request for comment from the Times. Business Insider has contacted the companies for comment.