Tesla’s Important Role in Advancing EVs & Innovation in China

Elon Musk has always had a vision for Tesla in the Chinese market. And according to Wall Street Journal“President Xi Jinping defiantly promised to make China the world’s future center of innovation and industry. The key to his plan was Elon Musk.”

“Mr Xi saw the South African-born entrepreneur as a technology utopian… and saw his Tesla Inc. as a spearhead that could make China a power in new energy cars. Mr. Xi rewrote the rulebook to allow foreign companies sole ownership of auto ventures, so Mr. Musk would open an electric vehicle factory in Shanghai, “reports WSJ.

“The authorities showered him with cheap land, low-interest loans and tax incentives, and in return expected Tesla to nurture local suppliers and strengthen backward Chinese electric car players,” said people with knowledge of the talks between Beijing and the company.

It is reported that “Chinese executives had become frustrated with the performance of domestic electric car companies and saw Tesla as an opportunity to reset the country’s automotive industry.”

In turn, Tesla’s arrival aroused people’s interest in electric vehicles. The launch in 2019 of the Chinese-made Tesla Model 3 helped convince consumers that such vehicles were a viable alternative to petrol cars. “

As we enter 2022, a look at the thriving Tesla community in China (YouTube: Tesla Greater China)

“China’s game is not to let Tesla win,” said Bill Russo, founder of Automobility, a Shanghai-based consulting firm. “China’s game is to get domestic industry to compete.”

And this is not surprising because “Mr. Musk remains personally popular in China, where people accustomed to conformity admire his maverick behavior… [and] Chinese tech entrepreneurs look to him for inspiration and track movements from ‘Silicon Valley Iron Man’. “

According to WSJ, “Today, Tesla probably manufactures more than half of its vehicles in China, suggests calculations based on the company’s third-quarter production and delivery figures and data from the China Passenger Car Association. Chinese sales helped Tesla to its first full year of profitability in 2020 and delivered about a quarter of Tesla’s revenue in the first nine months of 2021. “

And that’s not all. “The Shanghai plant is now Tesla’s main export hub and helped the company introduce its Model Y to Europe. … The plant manufactures more vehicles than Tesla’s plant in Fremont, California,” Mr. Musk said in October, supporting the company’s record global deliveries in third quarter.”

Meanwhile, local electric car manufacturers such as NIO, XPeng and Li Auto are now thriving since the arrival of Tesla. “Before Tesla, no one believed that a Chinese brand could be riveting,” said Michael Dunne, CEO of consulting firm ZoZo Go. Still, Dunne expects total sales of new energy vehicles in China to be around 3.1 million this year, more than double last year.

Originally published on EVANNEX.

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