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A setback for Tesla in China

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Tesla, America’s biggest electric car manufacturer, “is in danger of being relegated to an expensive niche in China because Elon Musk can’t clinch a deal to open a factory there,” according to Bloomberg.

  • In June 2017, Tesla signed a preliminary agreement with the Shanghai government to establish a factory to “ensure affordability,” hoping that local plants could cut prices of Tesla vehicles in China by a third.
  • However, the two sides have not agreed on the ownership structure of the factory: According to Bloomberg sources, Tesla wants a wholly owned company, but the central government says it must be a joint venture with local partners.
  • In 2017, Tesla sold 14,883 vehicles in China, a mere 3 percent of the country’s total electric car sales of 449,431 units.
  • “Tesla has no strategic path… It has the halo of Elon Musk, and its products are slightly ahead of the competitors, but the others — especially the Chinese EV startups — are catching up rapidly,” according to an auto industry analyst quoted by Bloomberg.

Jeremy Goldkorn

Jeremy Goldkorn worked in China for 20 years as an editor and entrepreneur. He is editor-in-chief of SupChina, and co-founder of the Sinica Podcast.