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Old 2nd November 2017, 17:28   #1
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Default Tesla to open new factory in China

Despite being invited by the Transport Minister of India to set up a manufacturing facility in the country, Tesla has revealed that it has finalized a new manufacturing factory in China.

Tesla's new plant will be located outside Shanghai in a free-trade zone. This makes the electric vehicle manufacturer the first foreign company to set up a factory on its own in China. As of now, a company is required to have a tie-up with a local company to set up a factory in China. In 2017 the Asian country has accounted for 18.7% of Tesla's total sales. The total electric vehicle sales in China stood at 3.51 lakh units last year and the country aims to cross the 70 lakh unit sales mark by 2025. In September, the country announced that it was working on a plan to phase out conventionally powered cars.

Speaking on the occasion of the company's Q3 results, Elon Musk - CEO of Tesla revealed that the production is tentatively expected to start in 2020 and the company aims to build over 2 lakh cars annually to serve the Chinese as well as other Asian markets.

With India announcing an electrification target by 2030, this could be a setback for the Indian government. This target date is even earlier than some other countries that have a partial electric infrastructure in place already.

Tesla to open new factory in China-tesla.jpg

Source - CNBC

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Last edited by blackwasp : 2nd November 2017 at 17:32.
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Old 2nd November 2017, 18:31   #2
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Default re: Tesla to open new factory in China

Good for Tesla, good for China. That Tesla chose China over India should not surprise anyone least of all our ministers. China offers better infrastructure, a bigger much bigger market, consistency of policy (very important for any investor) and a less troublesome inspector Raj. India is replete with instances over 20 years of the Govt willing to lay out the red carpet but the bureaucracy on the ground don't co-operate in the same spirit and pursue their own agenda.
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Old 2nd November 2017, 18:47   #3
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Default re: Tesla to open new factory in China

Ohh come on guys. Tesla did not chose China over India or any other country.

There were reports earlier that Tesla will build 3-4 giga factories in different parts of the world. One of them always expected to be China because its the world's largest market. Others are expected to be in Europe and may be in India. Even the China factory expected to be operational after 3 years. Its much easier to start a new factory in India than China. Here you don't need to partner with local company and share the technology or profits with the local partner. Because the China market is so huge, they are OK to go with local partners.

Tesla will eventually come to India. If and when they are interested, I am sure all the states will try to woo them with all kinds of incentives. The competition between states is very healthy now than even a decade ago.

India is attracting huge FDIs over the last few years higher than even China and US. Here are some numbers:
2013-14: $36 billion
2014-15: $45 billion
2015-16: $55 billion
2016-17: $62 billion

Last edited by sri_tesla : 2nd November 2017 at 18:52.
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Old 2nd November 2017, 18:56   #4
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Default re: Tesla to open new factory in China

Quote:
Originally Posted by sri_tesla View Post
Ohh come on guys. Tesla did not chose China over India or any other country.

There were reports earlier that Tesla will build 3-4 giga factories in different parts of the world. One of them always expected to be China because its the world's largest market. Others are expected to be in Europe and may be in India. Even the China factory expected to be operational after 3 years. Its much easier to start a new factory in India than China. Here you don't need to partner with local company and share the technology or profits with the local partner. Because the China market is so huge, they are OK to go with local partners.
The Wall Street Journal reports that they have come to an agreement with the local authorities on a “wholly owned” factory in the region.

The government has been talking about potentially relaxing those laws especially for the production of electric vehicles, but the company apparently went another way instead.

According to the WSJ report, Tesla will establish the factory in Shanghai’s free-trade zone:

Quote:
“The deal with Shanghai’s government will allow the Silicon Valley auto maker to build a wholly owned factory in the city’s free-trade zone, these people said. This arrangement, the first of its kind for a foreign auto maker, could enable Tesla to slash production costs, but it would still likely incur China’s 25% import tariff.”
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Old 2nd November 2017, 18:57   #5
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Default re: Tesla to open new factory in China

Yeah, that's not surprising because only an idiot CEO will chose India for setting up a factory for making an expensive Electric car - for now.

But from what I understand, Tesla is not tying up with a local 50:50 JV partner (whose primary role would be to steal technology & know-how) in China. So they will be subject to import tariffs even if it is being manufactured in Shanghai Free Trade Zone.
https://www.wsj.com/articles/china-e...sla-1506331805

Quote:
Under a draft proposal shared with auto-industry executives, China is preparing to allow foreign companies to manufacture electric vehicles in free-trade zones without a Chinese partner, though the cars would be still subject to import tariffs if sold in the country, the people said. The plans were reported earlier by Bloomberg.

The free-trade-zone plan for electric vehicles would be more cosmetic than a game changer for many companies, said Jing Yang, an associate director at Fitch Ratings. Companies operating in those free-trade zones will almost certainly still incur a 25% tariff levied on imported cars and not qualify for China’s generous EV subsidies, Ms. Yang said.
So basically neither Tesla nor its customers benefit from the new factory.
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Old 2nd November 2017, 19:19   #6
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Default re: Tesla to open new factory in China

From 'Ease of doing business 2017' released by World Bank recently, it is evident that India has taken giant strides in its ranking. Further we are widely expected to overtake China in its next edition.

So I don't think Tesla' decision is based on anything related to these factors. They might have taken into account that EV market here is still in nascent stage.

Last edited by GTO : 3rd November 2017 at 11:57. Reason: typo
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Old 2nd November 2017, 20:31   #7
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Default re: Tesla to open new factory in China

Even if the Indian government lifts any restrictions and Tesla were to open a gigafactory in India. How many would be willing plonk what would be like 2 or 3 million+ rupees on a car you can't drive too far out of town. There will be BHPians sure, but a company doesn't establish a shop for a small enthusiastic bunch. They all need volumes to justify the investment. Compare this to:

Quote:
The total electric vehicle sales in China stood at 3.51 lakh units last year
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Old 2nd November 2017, 21:01   #8
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Default re: Tesla to open new factory in China

It was pretty amusing to read the economic times article that almost seemed to suggest that India was on Tesla's signs. All we have to show for policy is punishing hybrids with high taxes and a minister whose ego trumped any actual work done on the ground.

China is poised to be a leader in this once in a lifetime shift in technology. Tesla is one step in the right direction.
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Old 2nd November 2017, 21:17   #9
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Default re: Tesla to open new factory in China

With the skewed and screwed view the GST took on hybrids, it's no wonder that Tesla went to China. India is so immature and vacillating policy wise. There is no uniform tax structure as a nation and when ever the GOI sees fit it imposes a tax to offset it's inefficiency. GST, Swach Bharat tax, Sochyala tax, Ghoshala tax, State luxury tax, Edu C(M)ess added to take Model 3 to ₹ few crores and you’ll be charged premium rates for charging your ride ₹150/unit: very much possible. So don’t worry run your mild hybrid by Maruti and keep smiling! It's becoming more and more difficult doing business in India and it's babudom, red tape may have gone but it's the 'huge' hidden costs "of the books" bribing that takes a huge toll.

Last edited by GTO : 3rd November 2017 at 11:59. Reason: spelling errors
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Old 2nd November 2017, 21:25   #10
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Default re: Tesla to open new factory in China

Quote:
Originally Posted by avira_tk View Post
It was pretty amusing to read the economic times article that almost seemed to suggest that India was on Tesla's signs. All we have to show for policy is punishing hybrids with high taxes and a minister whose ego trumped any actual work done on the ground.

China is poised to be a leader in this once in a lifetime shift in technology. Tesla is one step in the right direction.
True!

The article make it sound as if India and China were competing to get this factory or something. Tesla doesn't have a full size factory outside of the US right now. Why will they chose India over China when they have a bigger market as well as a manufacturing ecosystem unmatched by India? Heck, I'm losing hopes of seeing a Tesla in India before 2020.
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Old 2nd November 2017, 22:32   #11
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Default re: Tesla to open new factory in China

Quote:
Originally Posted by sri_tesla View Post
India is attracting huge FDIs over the last few years higher than even China and US. Here are some numbers:
2013-14: $36 billion
2014-15: $45 billion
2015-16: $55 billion
2016-17: $62 billion
That India attracts more FDI than China is a wrong information. in 2016 FDI into China was $116 billion!

Besides this, China's R&D in electric vehicles is at much advanced levels than in India, with better integration between universities, government labs and market players. Overall market is bigger due to government support and supply chains are better in place. That is something India needs to work up on.
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Old 3rd November 2017, 11:25   #12
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Default re: Tesla to open new factory in China

India rose in rankings in the "Ease of doing business" rankings. This was widely publicized. But one needed to read the fine print to know that it is still at number 100.

One of the parameter used is the construction of building. And in India, we need 42 licenses to start construction of a building. This is after reducing it from the erstwhile 90 something.
All I am trying to say is, India is still has a long way to go before corporates start seeing it as a preferred location.
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Old 3rd November 2017, 11:44   #13
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Default re: Tesla to open new factory in China

This is a perfect example of sensationalization of news that too of business news.

China is a big country and they will get big deals period. But this does not mean that they are preferring any country over other.

The day it makes business sense they will come to India.

Example :

http://www.hindustantimes.com/autos/...0CUalhM7L.html

It looks like this headline is designed by a 10 year kid who is jealous of another kid.

A big blow to Dreams? My foot.

Sometimes i feel that some media organizations are literally doing anti-India propaganda.
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Old 3rd November 2017, 14:35   #14
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Default Re: Tesla to open new factory in China

India would come into picture when Tesla wants to supply to right hand drive countries, which are a handful while China is left hand drive.

It only makes sense to try and supply to much larger universe along with solid local demand), and hence China over India.
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Old 12th July 2018, 13:46   #15
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Default Re: Tesla to open new factory in China

Tesla signs deal in China to build 2nd global assembly plant

Quote:
Tesla Inc. has reached a preliminary agreement with the Shanghai government to build a factory that’ll rival production from its lone U.S. assembly plant, as Elon Musk takes his biggest step yet to expand overseas.

The electric-car maker’s planned capacity for the factory is 500,000 vehicles a year, the Shanghai government said in statement. Bloomberg reported earlier that Musk, Tesla’s CEO, would be in the city for an event with the government on Tuesday. A Tesla representative in China didn’t immediately respond to a request for comment.

While Tesla has been working on setting up production in China for more than a year, President Donald Trump has been trying to bolster manufacturing in the U.S. Tesla follows Harley-Davidson Inc. in expanding outside the U.S., underscoring the urgency with which companies are moving to avoid damage from escalating trade disputes.

The youngest publicly held U.S. automaker is looking to expand its capacity and to more efficiently reach global markets. Tesla’s lone car-assembly plant is in Fremont, Calif., with a giant battery factory in neighboring Nevada. After moving ahead in China, the world’s largest market for electric vehicles, Tesla has said it will reveal plans toward the end of 2018 to build a plant in Europe.

Tesla said a year ago it was working with the Shanghai government to explore local manufacturing. Since then, production in China has become even more compelling: Last week, in response to tariffs imposed by the U.S., China increased the import duty on U.S.-made cars to 40 percent, prompting Tesla to raise prices. A plant in China also reduces shipping costs and potentially makes sourcing components more economical.

The company has boosted the prices of Model S sedans and Model X crossovers in China by as much as $30,000 after Beijing imposed additional duties on American-built autos, putting its vehicles beyond the reach of more consumers in its No. 2 market globally.

In November, Musk said Tesla is about three years away from starting production in the world’s largest auto market. The plant will make a couple hundred thousand vehicles a year for buyers in China and potentially other parts of Asia, he said at the time. Tesla probably will make the smaller Model 3 sedan and upcoming Model Y crossover in China, he said then, rather than the pricier Model S sedan or Model X sport utility vehicles, which often sell for more than $100,000 in the U.S.

China presents a massive growth opportunity for Tesla and rivals such as BMW AG and Daimler AG, which are seeking to take advantage of the fast-growing market. Sales of new-energy vehicles -- a category that includes battery-powered, plug-in hybrid and fuel-cell automobiles -- reached 777,000 units last year and could surpass 1 million this year, according to estimates by the China Association of Automobile Manufacturers. The government’s target is 7 million vehicles a year by 2025.

Tesla sold 14,779 vehicles in China last year, according to data from LMC Automotive. That gave it about 3 percent of the nation’s battery-powered electric-vehicle market, placing it as the No. 10 brand in that segment. China accounted for 17 percent of Tesla’s revenue for 2017, according a filing with U.S. regulators.

Ramping up manufacturing is critical to the carmaker being able to sustain itself financially while pursuing Musk’s mission to transition the world to battery-powered transportation. Tesla produced 5,031 Model 3s in the last week of the second quarter in its Fremont plant, meeting a target that Musk had said was crucial to generating cash and earning profit.
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