Tesla Inc. TSLA CEO Elon Musk has been accused by Rosa DeLauro of pressuring Republicans to abandon key U.S.-China investment restrictions to safeguard the EV giant's business interests in China.
What Happened: In a letter on Friday, DeLauro, the top Democrat on the House Appropriations Committee, stated that Musk used his influence to have Republicans scrap provisions aimed at regulating U.S. investments in China, reported Reuters.
She pointed to Musk's "extensive investments in China in key sectors" and alleged ties to Chinese Communist Party or CCP leadership.
The controversy centers on Tesla's Shanghai gigafactory, which produces about 50% of Tesla's global automobile output.
DeLauro argued that Musk's actions jeopardized critical legislation to safeguard U.S. supply chains and national security, accusing him of ” bullying Republicans into going back on their words."
Musk, in turn, criticized DeLauro on X, formerly Twitter, calling for her expulsion from Congress.
Why It Matters: Tesla has seen robust sales in China, bolstered by strong demand for its Model Y and Model 3 vehicles. In November, Tesla's retail sales in China reached 73,490 units, showing a significant recovery from earlier challenges in 2024.
The EV giant also faces stiff competition from local players like BYD Co., which leads the market, but Tesla's steady increase in weekly insurance registrations—21,900 units in early December—signals growing momentum.
Tesla reported third-quarter revenue of $25.18 billion marking an 8% year-over-year growth. While the company missed Wall Street estimates, automotive revenue reached $20 billion, up 2% year-over-year.
DeLauro's accusations highlight broader concerns about the risks of U.S. investments in Chinese technology sectors. October rules finalized by the Treasury Department aim to limit such investments in critical areas like artificial intelligence to protect national security.
However, the removal of provisions for outbound investment screening could leave gaps in safeguarding U.S. interests.
Price Action: Tesla’s stock declined by 3.46% on Friday, ending the session at $421.06. Despite this drop, the company's shares have surged 69.5% since the start of the year, significantly outpacing the Nasdaq 100 index, which has gained 28.68% over the same period, according to data from Benzinga Pro.
The latest ratings from Baird, Mizuho, and Goldman Sachs have established an average price target of $446.67, suggesting an upside potential of 5.53%.
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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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