Tesla shelves plan for China factory
November 8, 2017 Category China News Round-up, Weekly
With plans for a Tesla factory in Shanghai pushed back, Chinese electric car makers may have another chance to challenge the U.S. leader. On the flip side, the expected three-year wait for local production of Tesla might represent a setback for Shanghai’s free-trade zone (FTZ). Elon Musk, Chief Executive of Tesla, said that the company was three years away from making cars in China, playing down speculation that it could soon reach an agreement with the Shanghai government to set up its local plant.
Tesla was expected to start making vehicles in Shanghai’s Lingang New City, part of the city’s free-trade zone, after both parties admitted they were in talks. For Tesla, a local factory effectively helps it slash transport and production costs to better tap the Chinese market. As a Tesla plant would require a complete industry supply chain it would bolster the city’s ambitions of becoming a global innovation hub. Two sources with knowledge of the local government’s thinking said that the local partner for a potential joint venture was a sticking point during the negotiations. SAIC Motor and Shanghai Electric were among the candidates to set up ventures with Tesla.
The delay gives other players “a great opportunity and enough time to develop their new generation of electric cars”, said Peter Chen, Shanghai-based engineer with U.S. components maker TRW. “When Tesla eventually lands in the market in three years or even later, competitors may be able to churn out cars that can compete.” A number of Chinese carmakers including Nio and Future Mobility Corp (FMC) are aiming to become Tesla challengers with their own designs.
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