Tesla Going China
Tesla is a motor manufacturing company currently operating in the US and hoping to open up a plant in Shanghai, China. “Tesla is committed to the Chinese market, and we look forward to building even more cars for our customers here,” the CEO Elon Musk on Tuesday in Shanghai. Tesla’s shares closed up to 1.2% by Tuesday
Influence on Tesla’s China market entry
China is now the largest market for new car sales, as more Chinese consumers buy them for the first time. The world’s automakers have been rushing to build plants there, and Telsa has decided to venture into China due to China’s loosening its joint venture requirements for foreign automakers. These will make Tesla wholly own the factory but would also cooperate with the city of Shanghai on technology research and development.
Strategic goals for Tesla going to China
Tesla has long been interested in expanding production into China, but it wanted to keep control over its manufacturing. Automakers like to build cars close to where they will sell those cars, and China is the largest market for new vehicles. Having a plant in China also reduces the risk of being caught in future US-China trade disputes
CUSMA affecting Tesla going China
The United States and European countries affect Tesla’s venture in China as it has put pressure on China’s forced joint ventures and alleged theft of intellectual property. This has made China loosen the joint venture requirements for foreign automakers. Tesla will be the largest manufacturing project in Shanghai’s history funded at least partly by foreign investment
Effects of Tesla in China on other electric vehicle manufacturers
As Tesla enters the Chinese market, China would start loosening its joint venture requirements for foreign automakers with the restrictions on electric car manufacturing removed; this will encourage other electric vehicle manufactures to enter the market.
Reference
Isidore, C. & Jiang, S. (2018, July 10).
https://money.cnn.com/2018/07/10/news/companies/tesla-china-factory/index.html