Tesla May Miss Out On Chinese EV Push On Discord Over Local Factory

Tesla Inc and China disagree over the future ownership of a Tesla factory in Shanghai, Bloomberg reported on Wednesday, citing people with direct knowledge of the talks, which means that without local Chinese production, the U.S. electric vehicle maker continues to face high import taxes that make its cars much more expensive than those of local rivals on the world’s largest EV market.

China insists that all vehicle-manufacturing plants should be joint ventures with local partners, and currently all foreign carmakers must have a Chinese partner to manufacture vehicles locally. Tesla, on the other hand, wants to have full ownership of the future factory, Bloomberg’s sources said.

In November, Tesla’s chief executive Elon Musk said that the Chinese factory could start production in around three years.

“Don’t set your watch by this,” Musk said at a conference call, adding that “there’s a rough target of starting production in the next three years, and it would be serving the China market and some of the surrounding region.”

The current disagreement with Chinese authorities over the ownership of the factory doesn’t mean that a deal can’t be reached in the future, but until then, Tesla’s vehicles shipped from the U.S. will come at a price that includes a 25-percent import tax, which makes them unaffordable for most consumers, and more expensive than the EVs of local rivals.

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“Tesla has no strategic path,” Yale Zhang, managing director of Shanghai-based consulting company Automotive Foresight, told Bloomberg. “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,” Zhang added.

According to data crunched by Bloomberg, Tesla’s sales in China last year--14,883 vehicles—accounted for just 3 percent of the battery-powered car sales of 449,431 units. While Tesla’s EVs account for the majority of battery-powered vehicle sales in the U.S., Tesla ranks tenth in China, Bloomberg data shows.

By Tsvetana Paraskova for Oilprice.com

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