Why Tesla And Elon Musk Face Challenges In China Description video: Tesla recently broke ground on Gigafactory 3 in Shanghai and has grand ambitions in China but it faces serious competition there from a mix of Chinese and foreign automakers […]
Why Tesla And Elon Musk Face Challenges In China
Tesla recently broke ground on Gigafactory 3 in Shanghai and has grand ambitions in China but it faces serious competition there from a mix of Chinese and foreign automakers already manufacturing electric vehicles there, for example: BYD, BAIC Group, SAIC and Nio; and BMW, Mercedes, Audi and Toyota.\n\nTesla needs China, the world’s largest auto market, in order to succeed. Customer demand and government support for so-called \”new energy vehicles\” there is skyrocketing.\n\nCEO Elon Musk recently warned that without manufacturing in China, Tesla won’t be able to produce 10,000 Model 3 electric sedans per week (as the company has aimed to do for years) and won’t be able to offer the eagerly awaited base model at a price of $35,000.\n\n\”Bottom line is we need the Shanghai factory to achieve that,\” Musk said on the company’s 2018 fourth-quarter earnings call.\n\nHowever, Tesla — like other U.S. automakers — faces considerable competition in China.\n\nAccording to Michael Dunne, founder of automotive advisory firm ZoZoGo, \”China produced half of global electric vehicles last year. The U.S. produced about twenty percent. China is clearly way out in front in terms of size, production and scale.\”\n\nElectric vehicle makers that are already up and running there include:\n\n- NIO, which went public in September 2018\n- Warren Buffet-backed BYD\n- A partner of Volkswagen and GM called SAIC Motor\n- Geely Automotive Group which is the parent company of Volvo\n- BAIC Group, and its subsidiary, Beijing Electric Vehicle Co.\n\nA bevy of electric vehicle startups are on the rise in China too, including Byton and WM Motor Tech.\n\nChinese automakers have benefited from some $60 billion worth of subsidies and incentives since 2012, designed to make new energy vehicles affordable for Chinese drivers, according to ZoZoGo.\n\nBut as Musk recently bemoaned, Tesla hasn’t been able to cash in on those subsidies and tax incentives. As a result, a Model S that would cost around $80,000 in the U.S. today would cost around $140,000 in China after taxes, for example.\n\nTesla’s vehicles will probably remain very costly in China until the company begins manufacturing at its planned factory there in Shanghai.\n\nEven though Tesla broke ground on its Gigafactory 3 in Shanghai, the company has yet to publish an 8-K filing with the SEC showing that it has secured funding, or secured a material partnership, to build it out.\n» Subscribe to CNBC: http://cnb.cx/SubscribeCNBC\n\nAbout CNBC: From ‘Wall Street’ to ‘Main Street’ to award winning original documentaries and Reality TV series, CNBC has you covered. Experience special sneak peeks of your favorite shows, exclusive video and more.\n\nConnect with CNBC News Online\nGet the latest news: http://www.cnbc.com/\nFollow CNBC on LinkedIn: https://cnb.cx/LinkedInCNBC\nFollow CNBC News on Facebook: http://cnb.cx/LikeCNBC\nFollow CNBC News on Twitter: http://cnb.cx/FollowCNBC\nFollow CNBC News on Google+: http://cnb.cx/PlusCNBC\nFollow CNBC News on Instagram: http://cnb.cx/InstagramCNBC\n\n#CNBC\n#Tesla\n\nTesla Needs China, But Faces Stiff Competition
Tesla faces pressure from Chinese regulators
Five Chinese regulators have reached out to Tesla on product quality and safety as the company accelerates the pace of release of its latest model at its Shanghai plant..
China is the largest market for Tesla after the United States, with 120,000 EVs sold there in 2020.
Chinese authorities recently received complaints of abnormal acceleration and battery fire, according to a statement released on Monday..
In turn, Tesla said it would strengthen self-control and internal governance.
China is the largest auto market in the world, and the country’s government is actively promoting the introduction of electric vehicles. Tesla sold 15,484 locally made vehicles last month, according to the China Passenger Car Association.
But now Tesla is facing pressure from Chinese consumer market watchers to ask Tesla to improve internal governance, comply with Chinese laws and regulations, and respect consumer rights..
Tesla Shanghai said the company «sincerely accepted the recommendations of government departments», and that in her statement she «deeply analyzed the shortcomings».
Tesla is already facing quality issues in the US and must recall large numbers of Model S and Model X vehicles due to faulty touchscreens.
World’s Most Valuable Automotive Company Feels Increasing Competition From Chinese Competitors.
Chinese electric vehicle startup NIO unveiled its fourth production model last month, while Li Auto and XPeng are already producing new models.
Car company Ilona Mask received approval to build its Shanghai plant in 2018, becoming the first foreign automaker to fully own a plant in China.
Tesla backed Bitcoin on Monday, announcing that it bought $ 1.5 billion worth of cryptocurrencies in January and expects to start accepting digital coins as payment in the future..