| Title | Tesla's Big China Chances on Indefinite Hold | |
| Date | Tuesday June 13 2017, @08:12PM | |
| Author | CoolHand | |
| Topic | ||
| from the poor-elon dept. | ||
Some have believed that China is Tesla’s most lucrative opportunity. A new report makes it look like that opportunity has been lost. “China plans to halt issuing permits to produce electric vehicles because of concern additional approvals may lead to a glut in the world’s biggest auto market,”Bloomberg reports. Without permits, no Chinese production. Without Chinese production, no chance to gain relevance in a market surrounded by high custom barriers, and subsidies that favor domestics. Without the world’s largest EV market, no chance for Tesla to maintain scale and relevance in the world.
There have been occasional rumors of Tesla starting production in China, and each time, it turned out to be wishful thinking. Chinese production never was as easy as the many -- always false -- rumors made it sound.
- No foreign OEM may produce a car in China on its own. An at least 50:50 joint venture with a domestic maker is needed. There is talk that this may change some day, but so far, it has not.
- Then there is the “strong suggestion” by the Chinese government to sell that domestically produced electric vehicle under a new Chinese brand, owned by the joint venture. There is no foreign-branded EV made in China. A few weeks ago, an electric car joint venture between Volkswagen and Anhui Jianghuai Automobile (JAC Motors) to make electric cars has been approved by Chinese authorities. The EVs “will be made and sold under a new brand and logo,” state-run Xinhua news wire reported. Its brand is Tesla’s strongest suit. In China, it would go wasted.
- Then, to qualify for subsidies by the central government, the batteries used in the electric vehicle must be from an approved manufacturer, a source with in-depth knowledge of the business told me. There are only three approved battery makers, I was told, and they are all Chinese: BYD, Lishen, and CATL. Most of the value of an EV is in the battery.
- And finally, the joint venture must secure a long list of licenses. The toughest to get is the one from the National Development and Reform Commission [NDRC], essentially the state planner. According to the Bloomberg report, the NDRC stopped issuing these licenses, after handing out 15 of them since 2016. The Volkswagen/JAC JV was the last enterprise to get one.
Source: Forbes [behind an ad-block blocker.]
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