Tesla’s plans for China factory threaten to go kaputt


It is Tesla against the Chinese state as the dream bubble of a manufacturing hub in Shanghai threatens to pop. While the EV maker wants to own the Tesla factory alone, the authorities in Beijing insist on the rule that requires foreign producers to enter into a JV with a local firm.

Back in June it looked as if Tesla had cut a deal with the local government in Shanghai that would allow the Californians to set up shop in China (we reported). To make its EVs locally, is crucial for Tesla as any electric car brought in from outside faces a steep import tax that would set any Tesla model apart from local competition and into a small corner of the premium segment.

Yet, it looks as if negotiations have come to a halt. China’s central government wants Tesla to choose a local partner for its manufacturing venture while Tesla insists on wanting to own the factory alone. Bloomberg quotes people close to the matter but none of the parties and authorities involved cared to comment.

Tesla currently sells cars in China, but their price tag is fattened by an import tax of 25 percent. A Tesla Model X made in America and sold in China for example costs about 835,000 yuan (over 106,000 euros) and so local competitors are gaining ground. According to Bloomberg Intelligence, Tesla sold 14,883 electric vehicles in China, that is a 3% market share of the People’s Republic’s 449,431 units and less than half the number of PEV sold last month alone (we reported).

Estimates from Q3 2017 had put Tesla higher in the ranks, suggesting Tesla had approximately 9 percent market share in China’s all-electric vehicle segment, according to an analysis by Bloomberg New Energy Finance. This means the Californian EV maker could indeed run head to head with China’s domestic producers but hardly if it won’t be permitted to produce its EVs inside the country.



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