Tesla Moving to China

Tesla Moving to China

Tesla, one of the world’s most famous electric car companies is choosing to expand to China. In recent news, it has been revealed that the company is currently struggling. Within the Asian market, competition is increasing and across the world, notable car manufacturers are joining the band wagon of designing electric cars. Shifting towards a sustainable future has been an ongoing trend in China, due to their efforts in reducing green house gases as well as pollution. Mobile owners who have considered and also purchased electric vehicles have increase within the past few years. Tesla believes that they need to be more prominent in their oversea market and to make cars that their customers will be able to afford. Locating to China is their perfect opportunity to fix the supply and demand gap they have, especially because of the high tariffs imposed for imported cars.

Right now, it is in the talks to locating to Shanghai but that is not set in stone. Tesla has always been prominent within the Chinese markets. In 2016, China contributed about 15% of Tesla’s revenue. But nothing is for sure. There are still rules and regulations that come along with opening a factory. A project like this would require Tesla to find a joint-venture partner. There is a possibility of Tesla getting around the requirement by building the factory located completely in a foreign trade zone. The issue with this solution is that there would still be a 25% tax import for cars sold in china.

Also, China has announced that they would no longer issue anymore business licenses to make automobiles, which includes electric cars. Although Tesla does not have a license, they could possibly form an alliance with a company that already has one. If this does successfully go through, this could be a large victory for the country, wanting to be a world leader in electric car development.

But there have also been complaints of and concern coming from the Western countries. According to Chinese law, it required manufacturers who set up shop in the country to send vital technology to their Chinese partners. This has raised complaints that China will take and nurture the information to subsidize domestic competitors to Western companies.

As of now, it is not clear as to what exactly will happen for China and Tesla’s future. Today, Tesla’s are not cheap within the Chinese market. The Model S can range from 723,500 to 1,399,800 RMB equivalent to $104,000 to $203,000 USD. The exact same model will be on the market for about $70,000 to $140,000 in the states.