Elon Musk’s Spat: X Banned in Brazil and China, but Tesla’s the Key.

Elon Musk’s approach to free speech seems to vary significantly by region. After Brazil announced a ban on the platform X, Musk publicly expressed his outrage, framing the ban as a threat to democracy. He criticized the decision as the work of “an unelected pseudo-judge in Brazil,” suggesting that such actions undermine the foundations of democratic discourse.

Brazil represents a significant market for X, being its fifth-largest in the world. Musk’s fierce reaction is understandable as he strives to retain users on the platform he acquired for $44 billion nearly two years ago. His commitment to free speech appears to be selectively applied, particularly when considering China, where the app has been blocked since 2009.

The reasons behind Musk’s muted response to China’s restrictions are likely intertwined with his business interests in the country. Tesla, Musk’s key enterprise, is heavily invested in the Chinese market where it has received considerable state support and has built critical relationships with political and business leaders.

China is an invaluable part of Tesla’s global strategy. After inaugurating its first store there in 2013, the company established a gigafactory in Shanghai in 2019. Today, China is Tesla’s most significant market outside the United States, accounting for approximately a quarter of the firm’s revenue.

In 2023, Tesla reported $21.7 billion in earnings from China, demonstrating its critical nature in the company’s overall financial ecosystem. Other international markets do not receive as much visibility in Tesla’s financial reports, being grouped under a broad category that includes all markets outside the U.S. and China.

Given the rising competition from domestic manufacturers like BYD, Musk’s public discourse on free speech could potentially complicate his dealings in China. In the first half of the year, Tesla saw a decline in sales and its market share dropped from nearly 9% last year to 6.5% for the same timeframe this year, according to a report by Automobility.

Any public criticism of China could jeopardize Tesla’s growth and expansion strategies there. Additionally, the country plays a pivotal role in Musk’s aspirations for autonomous vehicle technology. Reports of Musk’s visit to China in April to discuss driverless technology projects led to a surge in Tesla’s stock price, reflecting his deep interests in maintaining a positive relationship with the Chinese market.

Meanwhile, Brazil is still developing its viability as a market for Tesla. Although there have been sightings of Teslas driven in Brazil, they have typically been imported from other countries, as no official Tesla dealership exists there. Other South American nations, like Chile, are more prominently featured in Tesla’s plans compared to Brazil.

Analysts note that Brazil was a minor player in the electric vehicle (EV) market up to this point, with approximately 50,000 plug-in EVs sold in 2023. However, this figure has been eclipsed rapidly, indicating a market on the rise, mainly fueled by imports from companies like BYD.

In 2020, Brazil’s former President Jair Bolsonaro expressed interest in bringing Tesla to Brazil during a trip to the U.S., where he met Musk. However, the expected collaboration has yet to materialize.

This month, political observer Han Yang pointed out Musk’s contradictory stance regarding free speech, criticizing him for not expressing any dissent regarding Chinese leader Xi Jinping’s silencing of X in the country. As long as Tesla remains reliant on the Chinese market, Musk’s commitment to free speech appears to be limited.

X has not provided any commentary regarding Musk’s approach to this issue.

Source: Business Insider