Why Tesla And Elon Musk Face Challenges In China

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Tesla recently broke ground on Gigafactory 3 in Shanghai and has grand ambitions in China but it faces serious competition there from a mix of Chinese and foreign automakers already manufacturing electric vehicles there, for example: BYD, BAIC Group, SAIC and Nio; and BMW, Mercedes, Audi and Toyota.

Tesla needs China, the world’s largest auto market, in order to succeed. Customer demand and government support for so-called “new energy vehicles” there is skyrocketing.

CEO Elon Musk recently warned that without manufacturing in China, Tesla won’t be able to produce 10,000 Model 3 electric sedans per week (as the company has aimed to do for years) and won’t be able to offer the eagerly awaited base model at a price of $35,000.

“Bottom line is we need the Shanghai factory to achieve that,” Musk said on the company’s 2018 fourth-quarter earnings call.

However, Tesla — like other U.S. automakers — faces considerable competition in China.

According to Michael Dunne, founder of automotive advisory firm ZoZoGo, “China produced half of global electric vehicles last year. The U.S. produced about twenty percent. China is clearly way out in front in terms of size, production and scale.”

Electric vehicle makers that are already up and running there include:

– NIO, which went public in September 2018
– Warren Buffet-backed BYD
– A partner of Volkswagen and GM called SAIC Motor
– Geely Automotive Group which is the parent company of Volvo
– BAIC Group, and its subsidiary, Beijing Electric Vehicle Co.

A bevy of electric vehicle startups are on the rise in China too, including Byton and WM Motor Tech.

Chinese automakers have benefited from some $60 billion worth of subsidies and incentives since 2012, designed to make new energy vehicles affordable for Chinese drivers, according to ZoZoGo.

But as Musk recently bemoaned, Tesla hasn’t been able to cash in on those subsidies and tax incentives. As a result, a Model S that would cost around $80,000 in the U.S. today would cost around $140,000 in China after taxes, for example.

Tesla’s vehicles will probably remain very costly in China until the company begins manufacturing at its planned factory there in Shanghai.

Even though Tesla broke ground on its Gigafactory 3 in Shanghai, the company has yet to publish an 8-K filing with the SEC showing that it has secured funding, or secured a material partnership, to build it out.
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Tesla Needs China, But Faces Stiff Competition

Comments

CNBC says:

Does Tesla have a chance in China with so much local competition? Let us know what you think below:

I_haz_no_comments says:

ok america u can now say china is trash we don't mind go ahead don't use china stuff

oinkpiggin says:

Another US company fell into this trap. You set your factory there as a start, then eventually you will move all of your factories there due to low cost and cheap labors. China will happily take you in, but they will secretly steal your technology. Then, use that against you. The world needs to stop Chinese and their shady methods.

Kea Lee says:

China seize opportunity while others debate until cow come home ! Tesla will be the next car people in China love !!

Ram Chandra says:

Ban china item in india becuse china doing support pakistani terorist

w23857980 says:

Tesla will be like D&G.

David Wilson says:

As long as the cars being made in China stay in China..to easy to use spy technology.musk is a foreigner ,so let him hang with foreigners.c China equals cheap labor.not to hard to figure out why go there.

Jeremy Blake says:

Since when do the Chinese care about quality

Mai Kuraki says:

地图居然有台湾???哈哈哈哈

paradise paradise says:

Tesla's technologies will be stolen by China's spying and manufacturing industry

Chi Chu says:

But Tesla still not going to out sale electric car in China,because he can’t compete with the local Chinese electric car prices.

John Smith says:

How about India. They have the largest population in the world. They can make Model one. Three wheeler Tesla.

Joe .J says:

So China breaks into Tesla's computer systems and steals their intellectual property and then MUSC rewards them by opening a gigafactory there? So are we going to allow China to sell electric cars in the United States after they steel all kinds of intelectual property off all of our companies?

ben h says:

Many cars on North America streets does not meet emissions standard in China. But old cars are easy to work on If you are handyman.

Michael Leuff says:

the entire idea of the car, vehicle, automobile, whatever you want to call it, is just. so. dumb.
it doesn't matter what engine you put in it.
it is the single worst transportation invention ever.
trains, ships, planes, horses, bicycle, motorcycle, subway, these are genius, energy efficient inventions.
but the car? it really is the worst transportation format, in every single way.

juan reynoso says:

What's the best way to copy your stuff steal your s*** and produce it way cheaper

RaindropsOnMyHead1 says:

Keep feeding China omg

Sam Finance Tech says:

Tesla will likely succeed in China..Elon is appreciated there, he will be given supported headstart..Wish you success, Elon.

Conqwiztadore22 says:

Don't go to China. They ll steal your technology

Sequeira mendes says:

Don't buy american !!!!

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