Tesla blocked in China: Shanghai has not yet reached an agreement to build a factory

Tesla Inc., the nation’s biggest maker of electric cars, is plunging into a niche niche in the Chinese market because Elon Musk has so far set up a production plant in China The matter still can not reach an agreement.

Sources said Tesla seven months ago said it is working with the Shanghai government in seeking to assemble cars here, and now such an agreement has not been reached, because the two sides in the proposed ownership structure of the plant there are differences. The source is reluctant to disclose his identity because the two sides are still in a state of confidentiality.

Tesla’s slow start to local manufacturing means Tesla is exploring the possibility of selling new energy vehicles such as battery-powered vehicles, plug-in hybrids and fuel cell vehicles in China. The Chinese government hopes to reduce air pollution and reduce dependence on imported oil, and through relevant policies to stimulate consumer dependence on fuel consumption.

Commenting on the importance of the Chinese market to Tesla, Jeffrey Osborne, an analyst at Cowen & Co. in New York, said: “It is a market they need to establish.”

Tesla declined to comment on the negotiation between the local government and the local government in producing cars.

The differences between the two sides do not mean that no agreement will be reached in the future. Tesla currently sells cars in China, but imports tax is 25%, which makes the company’s car sales in China beyond the affordability of most consumers.
Tesla Model X produced in the United States is shipped to China for about 835,000 yuan (about 174,000 U.S. dollars), and the prices are for the Chinese market from BAIC Motor Corp., Warren Buffett invests in BYD Co. and rival cheaper products like startups NIO and Byton.

Tesla said in June last year that it is working with the Shanghai government to explore local production, and the company was expected to be able to define production plans more clearly by the end of 2017. The company said it needed to set up factories locally to ensure that its products were at competitive prices in the markets it served.

In November last year, Elon Musk said at a press conference that Tesla was about three years from the start of production in China, which means the earliest production date would be in 2020.

Tesla this waiting may not be over soon. Elon Musk’s talk with analysts announced on February 7 after the company’s earnings announcement did not address China and the company did not mention its plans in China.
“Tesla has no strategic route,” said Yale Zhang, general manager of AutomaticForesight, a Shanghai-based consultancy. “It owns Elon Musk’s aura and its products are slightly ahead of competitors, but other companies – – especially Chinese electric car start-ups – are catching up fast. ”

According to data collected by Bloomberg, the vast majority of the 104,471 vehicle-powered cars in the United States are Testers. However, in China, Tesla only sold 14,883 vehicles, accounting for 3% of the 449,431 existing sales of battery-powered vehicles in China.

Tesla only ranked tenth, Beijing Automotive Group’s Beijing Electric Vehicle Co. sales of 10.2341 million units, ranked first; BYD sales of 3.3020 million units in the third.

Tesla said it has set up 31 retail stores and over 1,000 “Superchargers” in China to charge an electric car in 30 minutes.

China Association of Automobile Manufacturers estimates that new energy vehicles (including battery powered vehicles, plug-in hybrids and fuel cell vehicles) sold 777,000 units last year and may exceed 1 million this year. By 2025, the Chinese government’s goal is to sell 7 million vehicles a year.

Buyers said the considerable subsidies are working. 36-year-old Shanghai office worker Lily Li bought a Beiqi new energy car, the new generation of pure electric entry-level models EV160 less than the price after the subsidy of less than 100,000 yuan. Although this electric car has less mileage than Tesla, Li Lili said, “I am very interested in Tesla battery technology, but only when Tesla’s price is below 300,000 yuan, I can afford. “It takes years to catch up, so I had to solve the problem with a domestic electric car.”

According to BYD official website, BYD’s best-selling e5 models, after deducting government subsidies, cost 129,900 yuan.
Nio and Byton also beat Tesla in terms of price. Nio’s ES8 runs 355 kilometers (221 miles) on a single charge and costs $ 448,000.

Byton, a company formerly founded by BMW AG in Nanjing, Byton last month released a SUV at CES in Las Vegas that will be set at $ 45,000.

“For Tesla, the market will be narrower here,” said Bill Russo, chief executive of Automobility, a Shanghai-based consulting firm. “If your price is twice that of a competitor, then you Always in trouble. “