Elon Musk Accused of Pressuring GOP on U.S.-China Investment Rules

Overview: Tesla Inc. TSLA CEO Elon Musk faces allegations from Rosa DeLauro, who claims he is pressuring Republicans to lift key U.S.-China investment regulations to protect Tesla’s interests in China.

The Allegations: In a letter sent on Friday, DeLauro, who chairs the House Appropriations Committee, contended that Musk leveraged his influence to persuade Republicans to eliminate provisions aimed at regulating U.S. investments in China, according to Reuters. She accused Musk of having “extensive investments in China” along with notable ties to the Chinese Communist Party (CCP) leadership.

This controversy revolves around Tesla’s Shanghai gigafactory, which accounts for approximately 50% of the company’s global car production.

Tesla’s Performance in China: DeLauro emphasized that Musk’s actions could undermine crucial legislation intended to protect U.S. supply chains and maintain national security, claiming he “bullied Republicans into going back on their words.” Responding to the accusations, Musk criticized DeLauro on X, previously known as Twitter, calling for her expulsion from Congress.

Tesla’s Sales Figures: Despite these political tensions, Tesla has achieved strong sales in China, particularly for its Model Y and Model 3 vehicles. In November, the company sold 73,490 units in China, marking a notable recovery from earlier 2024 challenges. While Tesla contends with robust competition from local firm BYD Co., which leads the market, its consistent increase in weekly insurance registrations—21,900 in early December—indicates a positive trend.

Financially, Tesla reported a third-quarter revenue of $25.18 billion, reflecting an 8% increase from the previous year. Although the company fell short of Wall Street expectations, its automotive revenue still reached $20 billion, a modest 2% rise year-over-year.

DeLauro’s statements spotlight a growing concern regarding U.S. investments in Chinese tech sectors. New rules from the Treasury Department finalized in October intend to limit investments in crucial areas like artificial intelligence for the sake of national security. However, the potential removal of certain outbound investment screening measures could create vulnerabilities for U.S. interests.

Market Impact: On Friday, Tesla’s stock dropped 3.46%, closing at $421.06. Nevertheless, shares have soared 69.5% since the beginning of the year, significantly outperforming the Nasdaq 100 index, which has increased by 28.68% during the same period, as per data from Benzinga Pro. Analysts from Baird, Mizuho, and Goldman Sachs are estimating an average price target of $446.67 for Tesla, suggesting a 5.53% upside potential.

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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.

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