Tesla Will Build A Factory in China

The news broke last week that Tesla will build a factory in China, and auto industry analysts say that the deal is unusual because the Chinese government is allowing Tesla to retain 100% ownership of the manufacturing facility.

Previous manufacturing investments by auto manufacturers in China required partial ownership from a Chinese auto company partner, and, technology-sharing.

Apparently, China is so eager to get to it’s goal of full electrification of it’s vehicle fleet that it waiving those requirements for Tesla, which makes only electric vehicles.

This works for Tesla, too, since a Tesla now costs 50% more in China than in the U.S. This is all due to the country’s stiff vehicle import tariffs. An in-country manufacturing facility is expected to cut the cost of a new Tesla by 0ne-third.

Tesla Will Build A Factory in China - Seatco does the best car interior work in the DC Area

Tesla sold $1 billion worth of cars in China. the world’s largest new vehicle market, last year, despite the high tariff, so it seems the company’s cars are going to be much more popular in China very soon, considering the anticipated huge price drop.

Electric vehicles were rapidly approaching what many considered a tipping point in terms of manufacturer interest as battery costs and manufacturing costs kept decreasing, and that tipping point has now probably happened with China’s recent announcement that it is mandating an all-electric fleet in the near future. When you have the largest new car market in the world, and you issue an edict like that, you are basically shaping the future of vehicle production for all of the major car companies.

And when GM announces it is planning to abandon the internal-combustion engine as soon as it can, as it did recently, well, that pretty much seals the deal, doesn’t it?

So, Tesla will build a factory in China. Expect other vehicle manufacturers to seek similar terms from the Chinese government to build their own electric cars in China. Hopefully, this will not stifle manufacturing of electric vehicles here in the States.

Leave a Reply

Your email address will not be published. Required fields are marked *