Throughout its history, Tesla (TSLA) and CEO Elon Musk have walked to the beat of their own drum. Making electric vehicles on their own when none were available for sale, selling cars direct to customers and sidestepping dealerships—and creating and maintaining Tesla’s own bespoke charging network.
These days, as Tesla just recently celebrated its 20-year anniversary as a corporation, the company may be in something of a compromise phase.
Take Wednesday’s somewhat unprecedented move in China. As first reported by Bloomberg, Tesla and 15 of its EV rivals in China - including the likes of BYD, NIO, Xpeng, and Geely - signed a pact during a ceremony at the China Auto Forum in Shanghai in which the automakers pledged to maintain fair competition and avoid “abnormal pricing.”
Apparently the Chinese government directed the China Association of Automobile Manufacturers (CAAM), the main trade group in the country, to bring the rivals together to sign the pact.
Nevertheless, it seems Tesla is now willing to play ball, and do what the Chinese government would like to see. Namely: winding down the price war, and protecting local automakers in the world’s largest EV market.
“Doing business in China means making the government happy,” said Leland Miller, China Beige Book CEO and an expert on doing business on the mainland. “If Beijing thinks a price war has gone on long enough, then those are the new rules Tesla and everyone else will have to abide by.”
Per Bloomberg: Tesla agreed to, among other things, “maintain fair competition and not disrupt fair competition with abnormal pricing,” in addition to “[promoting] core socialist values… and [taking] on the heavy responsibility of maintaining steady growth, strengthening confidence and preventing risks.”
Signing the pact isn’t exactly the kind of move one would see in CEO Elon Musk’s playbook. He has, for instance, lambasted government programs, including saying that EV subsidies in the US are not necessary. (Though Tesla took advantage of the tax credits for years.)
In this case - compromising with the Chinese government may not actually hurt the company.
“Tesla continues to gain market share globally relative to the auto market generally and EV market specifically. This announcement comes at a time when they may feel more comfortable with their relative position,” Canaccord Genuity managing director George Gianarikas told Yahoo Finance.
A new, more open Tesla?
Nevertheless, this move paired with the Tesla’s latest collaborations with its Supercharging network, shows that the company is willing to compromise when it sees fit - and is financially beneficial. Tesla’s recent partnership with Ford (F) to use its Supercharger network—blindsided the industry. Many experts figured Tesla would hold onto that competitive advantage.
Tesla's deal with Ford led to other dominos falling: GM (GM), Rivian (RIVN), and Volvo (Volcar-B.ST) also adopted Tesla’s NACS standard and joined its charging network. And just this Friday Tesla added another partner to the mix, as German luxury giant Mercedes-Benz (MBG.DE) will now join the Supercharger Network, and will include Tesla's NACS port on its EVs starting in 2025.
“Tesla is happy to support other EVs via our Supercharger network," Musk said, and that it was an “honor” to be working with Ford on charging. (The “honor” will likely include some form of payment from Ford, GM and other partners.)
Perhaps a more conciliatory, perhaps even friendly, Tesla will emerge as the company matures. Even one that’s willing to work with President Biden, and other politicians when it sees fit. Maybe this is why a more compromise-driven Tesla hasn't faced much heat for what appears to be an anti-competitive deal it signed in China.
“Politicians in the U.S. have gone out of their way to not be too critical of Elon's dealings in China, presumably because they want support from other areas of his empire, such as SpaceX,” China Beige Book’s Miller said. “I doubt this one will move the needle.”
Tesla and Elon Musk may have learned compromise isn’t a dirty word - just as long as it boosts the bottom line.
Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.
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