A setback for Tesla in China

Business & Technology

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.