Tesla's China factory could hit a roadblock over disagreement in ownership

Discussion in 'In the News' started by simonalvarez0987, Feb 14, 2018.

  1. simonalvarez0987

    simonalvarez0987 Active Member

    Joined:
    Dec 21, 2017
    Messages:
    513
    #1 simonalvarez0987, Feb 14, 2018
    Last edited by a moderator: Feb 14, 2018
    [​IMG]

    [​IMG]

    Tesla and the Chinese government are reportedly not seeing eye-to-eye with regards to the ownership of the electric car maker’s proposed factory in Shanghai.

    The planned electric car facility in Shanghai is widely believed to be the site where the production of the Model Y, Tesla’s crossover SUV, and Model 3 will happen. Just last year, reports emerged that Tesla had already secured approval from the Shanghai municipal government to operate the planned facility in the region’s free-trade zone. By then, it seemed like Tesla’s China factory was well on its way to becoming a reality.

    According to individuals who claim to have direct knowledge of the matter, however, Tesla and Shanghai officials have disagreed about the ownership of the proposed electric car factory. The Chinese regulations were reportedly firm on their rule of requiring foreign car makers to engage in a joint venture with a local firm. Tesla, however, is firmly opposed to the idea and would like sole ownership of the facility, according to a Bloomberg report.

    Tesla’s difficulties with the Chinese government have resulted in several drawbacks for the California-based electric car maker. Due to its cars not being manufactured in China, its vehicles have been weighed down in the market with a steep 25% import tax, making them far more expensive than electric car offerings from local competitors.

    Tesla’s disadvantage on pricing appears to have become a huge opening for local electric car makers. China currently has seen sales of 449,431 electric vehicles to date, and only 14,883 of these were Teslas. The rest of the number is dominated by two of China’s biggest local electric car makers, Beijing Electric Vehicle Co., which has sold 102,341 cars, and BYD, which has sold 33,220 vehicles so far. Both these local electric car makers offer vehicles that are significantly more affordable than Tesla’s lineup.

    [​IMG]Tesla Baolong Mansion Supercharger with 50-stalls in Beijing

    Despite these disadvantages and the reported problems on its upcoming factory in the country, however, Tesla has not slowed down its initiatives in the Asian economic superpower. As we noted in a previous report, China has recently upgraded its Supercharger station in Beijing, equipping the location with 50 stalls and making it the largest Tesla charging facility to date.

    The California-based firm has been quite vocal about its intentions of saturating the Chinese electric car market as well. As we noted in a previous report, Tesla CEO Elon Musk stated that the Model Y crossover SUV and a part of the Model 3 production might be sourced from China. In a Q&A call with analysts last year, the Tesla CEO noted that having a China-based facility is one of the most effective ways to ensure that the company remains competitive in the region.

    “(Tesla) won’t be making Model S and Model X, but we’ll be making probably Model 3, probably Model Y primarily for the local Chinese market and it’s really the only way to make the cars affordable in China, but it’s three years out, so,” Musk said. 

    Article: Tesla's China factory could hit a roadblock over disagreement in ownership
     
  2. Joe Ho

    Joe Ho New Member

    Joined:
    Feb 8, 2018
    Messages:
    6
    Location:
    Rialto, CA
    Doing business in China is like "talk about tiger fur business with a tiger 與虎謀皮" never a good idea. They often just change business laws to suit their own dictatorial interest. It's a big market of course, but watch your back,
     
  3. prasunshah

    prasunshah New Member

    Joined:
    Jan 26, 2018
    Messages:
    3
    Location:
    Plano
    Tesla cars send data from all of its cars to servers in the US. seeing how the US has banned huawei on national security concerns, China by the same logic, can hit back on Apple and Tesla.
     
  4. Joe Ho

    Joe Ho New Member

    Joined:
    Feb 8, 2018
    Messages:
    6
    Location:
    Rialto, CA
    Yep, they may eventually (or maybe it's part of the deal) to setup local data servers behind the GREAT FIREWALL of China.
     
  5. Roy_H

    Roy_H Member

    Joined:
    Jan 12, 2018
    Messages:
    84
    Location:
    Ontario, Canada
    Tesla has a European factory in Holland where final assembly is performed. This is no where near a full factory as pre-assembled cars are shipped without things like wheels and batteries, but it is enough to qualify as made in Europe and avoid import taxes. I wonder what the minimum level of \"manufacturing\" is in China to qualify. If it is similar to Europe, then a joint venture with most of the car made in USA would seem like an acceptable solution.
     
    • Agree Agree x 1
  6. Michael Russo

    Michael Russo Moderator

    Joined:
    Dec 16, 2016
    Messages:
    1,734
    Location:
    Pau, France
    Except that with the LT potential of the China EV market, a full fledged local manufacturing facility may make more economic sense. The hurdle of partial Chinese equity can be understood up to a certain extent yet all western world carmakers had to bow to that in the past.

    Can see T≡SLA fighting to retain 100% ownership yet to the point of no plan being built ultimately...
     
  7. Bubba2000

    Bubba2000 New Member

    Joined:
    Apr 12, 2017
    Messages:
    5
    As tempting as the Chinese market may seem, it makes no strategic sense to build any factory in China with or without a partnership.  Tesla with limited capital needs to focus In fixing the current factory and GF.  Evolve Model  Y from Model 3. Achieve huge economies by scaling production to 2M plus/year with incremental capital instead messing with new expensive greenfield in China.  Better off paying the 25% import tax.  Huge global demand.  Tesla does need to secure Co, Li supplies, optimize their use.   If rare earths become too expensive, use induction motors.  Chinese will steal IPRs, manufacturing process, skills, etc. They screwed all our major industries similarly.  Giant sucking sound of our jobs, technology, capital, skills.  Need cheap labor and cut costs?  Make efficient designs that simplify manufacturing, automate, etc.  Meanwhike our government needs to play hardball with tariffs, forced partnerships, theft of IPRs.  Trump is all hot air... selling condos in China, India, etc.  
     

Share This Page