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Why Tesla And Elon Musk Face Challenges In China

Published on Feb 12, 2019 686,876 views

Tesla recently broke ground on Gigafactory 3 in Shanghai and has grand ambitions in China but it faces serious competition there from a mix of Chinese and foreign automakers already manufacturing electric vehicles there, for example: BYD, BAIC Group, SAIC and Nio; and BMW, Mercedes, Audi and Toyota.

Tesla needs China, the world's largest auto market, in order to succeed. Customer demand and government support for so-called "new energy vehicles" there is skyrocketing.

CEO Elon Musk recently warned that without manufacturing in China, Tesla won't be able to produce 10,000 Model 3 electric sedans per week (as the company has aimed to do for years) and won't be able to offer the eagerly awaited base model at a price of $35,000.

"Bottom line is we need the Shanghai factory to achieve that," Musk said on the company's 2018 fourth-quarter earnings call.

However, Tesla — like other U.S. automakers — faces considerable competition in China.

According to Michael Dunne, founder of automotive advisory firm ZoZoGo, "China produced half of global electric vehicles last year. The U.S. produced about twenty percent. China is clearly way out in front in terms of size, production and scale."

Electric vehicle makers that are already up and running there include:

- NIO, which went public in September 2018
- Warren Buffet-backed BYD
- A partner of Volkswagen and GM called SAIC Motor
- Geely Automotive Group which is the parent company of Volvo
- BAIC Group, and its subsidiary, Beijing Electric Vehicle Co.

A bevy of electric vehicle startups are on the rise in China too, including Byton and WM Motor Tech.

Chinese automakers have benefited from some $60 billion worth of subsidies and incentives since 2012, designed to make new energy vehicles affordable for Chinese drivers, according to ZoZoGo.

But as Musk recently bemoaned, Tesla hasn't been able to cash in on those subsidies and tax incentives. As a result, a Model S that would cost around $80,000 in the U.S. today would cost around $140,000 in China after taxes, for example.

Tesla's vehicles will probably remain very costly in China until the company begins manufacturing at its planned factory there in Shanghai.

Even though Tesla broke ground on its Gigafactory 3 in Shanghai, the company has yet to publish an 8-K filing with the SEC showing that it has secured funding, or secured a material partnership, to build it out.
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Tesla Needs China, But Faces Stiff Competition

  • CNBC
    CNBC 4 месяца назад (изменено) Does Tesla have a chance in China with so much local competition? Let us know what you think below:
  • Dennis Tienesen
    Dennis Tienesen 4 дня назад Ofcourse. In US zero chance.
  • That guy
    That guy Неделю назад @Alex F Because it is?
  • citizen of mangaldan pangasinan
    citizen of mangaldan pangasinan Неделю назад Nope. China market will try to clone or imitate tesla
  • veena B
    veena B Неделю назад Yes
  • eyesuckle
    eyesuckle 2 недели назад @Kizz This Thank you for that report directly from the 1950s. Say hi to Joe McCarthy when you see him.
  • Armando Sanchez
    Armando Sanchez 2 недели назад The news complain faithfully that China takes advantage of use then try to force Them to buy and use American products the news is more for entertainment than news
  • Master Zhen
    Master Zhen 2 недели назад Have you seen the numbers of Tesla in chengdu? It’s everywhere... also there is a taxi company who has only Teslas.
  • Redwood Madrone
    Redwood Madrone 2 недели назад EnvyMiA Audi and others are not « waiting ». They are racing full speed to bring EV to the market.
  • Paul Sucker
    Paul Sucker 1 месяц назад And in a few years Tesla will have to compete with their own designs, manufactured and sold by other companies at say half the price.
  • thsu1
    thsu1 1 месяц назад Alex F because CNBC stands for Chinese National Business Channel.
  • rhythmmaster
    rhythmmaster 1 месяц назад @Alex F Americans don't give a damn about Taiwan, they don't know where Taiwan is, don't embarrass yourself
  • Diego Meza
    Diego Meza 1 месяц назад @Bogusgal u dont get the joke
  • Bogusgal
    Bogusgal 1 месяц назад @S H And the Chinese are watching Netflix like crazy, right? lol!
  • Bogusgal
    Bogusgal 1 месяц назад @Aman Singh So, you think wealthy people are sitting on their asses clicking videos about Tesla on Youtube?
  • Bogusgal
    Bogusgal 1 месяц назад @JAISON JOSE McDonald's is McDonald's until they go to Vietnam and realize that no one id buying their fast food as much as they thought.
  • Bogusgal
    Bogusgal 1 месяц назад @Tag Makers Pet Tags I stopped at your words which you said "market segment, "which was addressed somewhat at the end of the video.
  • Bogusgal
    Bogusgal 1 месяц назад @Diego Meza Well, good-luck believing that TSLA in China is fake news.
  • Bogusgal
    Bogusgal 1 месяц назад (изменено) @Alex F Is that an answer to the question of the OP?
  • thinkabout
    thinkabout 2 месяца назад @Kizz This then you better throw out all your stuff made in China
  • Jonathan Pusar
    Jonathan Pusar 2 месяца назад They don't need to. The elite in China wants Tesla's which is why they've granted them the ability to build their own factory.
  • thinkabout
    thinkabout 2 месяца назад in China " FACE " is very important Tesla is the BRAND they want
  • Pera Hauraki
    Pera Hauraki 2 месяца назад I was in HK 3 yrs ago and saw about 20 model S' in one day!
  • Pera Hauraki
    Pera Hauraki 2 месяца назад Taycan and competition toTesla. Mercedes, Audi etc don't have the 100% business model with China...
  • ba sillah
    ba sillah 2 месяца назад China will just copy Tesla's stuff so the idiots are giving their business away for free because China will just resell their stuff at cheaper prices putting them out of business.
  • fryede03
    fryede03 2 месяца назад No, it is a ploy to steal intellectual property I bet. Or design something around it.
  • Zhengzhao Mao
    Zhengzhao Mao 2 месяца назад Kizz This keep burning fuel and poisoning the air
  • Amidat
    Amidat 2 месяца назад @Joey Gee Ummm - no the Chinese love German cars more than anything else. So really the German electric cars will be the biggest threat.
  • Anton
    Anton 2 месяца назад Yes. Tesla makes the best car with volts in it
  • Enhbayr Bilegt
    Enhbayr Bilegt 2 месяца назад @漢仔 boy. You don't be so toxic. You've overthinking it. :P
  • Caroline Liu
    Caroline Liu 2 месяца назад @Alex F Because they are afraid of apologising on Chinese TV.
  • yang chen
    yang chen 2 месяца назад Alex F why not ?
  • Crybabehot
    Crybabehot 2 месяца назад Tesla has the technology way beyond automakers in China,it will be huge for Tesla,they will sale millions cars
  • Mark Xie
    Mark Xie 3 месяца назад @Alex F did u know how stupid r u saying?
  • Darth Awar
    Darth Awar 3 месяца назад Because the real Chinese Government that the CCP overthrew exiled themselves to Taiwan which at the time was part of China but after they moved their it was decreed by the people of Taiwan to now be an Independent Country and not ruled by the evil CCP! They have their own Goveremnt, Money, Laws, Taxes, Culture, Business and while the CCP keep saying they own it they have never been able to enforce their will upon these great people! @Zhiyong Lu China/CCP steals they stole Tibet, Mongolia, Hong Kong which is meant to be self governing but is controlled more and more by the CCP and they keep trying to take over other nations either by force or threat of force or by debt!!!
  • Zhiyong Lu
    Zhiyong Lu 3 месяца назад Alex why Taiwan not a part of China?
  • Darth Awar
    Darth Awar 3 месяца назад The reason Tesla needs no partner is they already share all their patents unlike other auto makers!
  • J M
    J M 3 месяца назад @Alex F because it is! Don't get confused between China n Chinese communist government!
  • Jeansen Co
    Jeansen Co 3 месяца назад Why would the 4 Biggest Government Owned Banks and the Shanghai Government provided loan to an American-owned corporation?
  • hao lee
    hao lee 3 месяца назад Tesla, have a chance. But, the major problem was Tesla's factory was built on a bonded area. So, their product are still subject to 40% import tax to be sold in China.
  • NoPain NoGain
    NoPain NoGain 3 месяца назад @Big Dream they have a chance for chinese spies to copy then boycott
  • NoPain NoGain
    NoPain NoGain 3 месяца назад @Alex F Taiwan belongs to China
  • Kevin
    Kevin 3 месяца назад This is exactly why we should have been counter tarrifing China this whole time, they sold everything here for years without any tariff's all while forcing our companies to pay high tariff's and taxes. And these tariffs predate the trade war and Trump presidency completely, it's one of the major reason's for this trade war.
  • Ivan Bernal
    Ivan Bernal 3 месяца назад China believes in Tesla. They will be the largest vehicle manufacturer in the world by 2030. RIP Internal Combustion Engine.
  • dsada aa
    dsada aa 3 месяца назад No because Chinese government want to protect their local manufacturers
  • Rene Chang
    Rene Chang 3 месяца назад @JAISON JOSE Nah. Just wait till other well known names fully enter the market. Brand loyalty is a die hard. No one company will dominate lol.Look around you. Does everyone eat the same food.Buy same name brand clothes or have same name brand phone.
  • Rene Chang
    Rene Chang 3 месяца назад They have a chance but loyalty dies hard. Luxury brands over 50 years old are going electric too.Plus china brands.Some people are patriotic about their country.
  • Jason Chen
    Jason Chen 3 месяца назад @Alex F As you see, Taiwan is a part of China
  • ILuvAmp
    ILuvAmp 3 месяца назад (изменено) Tesla will be the premium luxury brand for the China market. Similar to how German cars were hot before Tesla in the US.
  • Rajivanan Francis
    Rajivanan Francis 3 месяца назад Get the price down. That is whats needed. We know that tesla has quality.
  • randy david
    randy david 3 месяца назад CNBC its a hard battle to compete against any china industries because of this massive subsidies. Its an unfair advantage to them.
  • Qilin Yang
    Qilin Yang 3 месяца назад @Alex F because it is a part of China:)shabitaidu
  • Kizz This
    Kizz This 4 месяца назад Tesla is a commie partner. Not buying telsa, ever
  • Max Ly
    Max Ly 4 месяца назад @Thomas not a chance.   where did you get your info? Last heard tesla sales declined in 2018.
  • sun and moon
    sun and moon 4 месяца назад @Alex F can you tell me why USA can do Nuclear testing at Bikini Atoll? i think this is more damage to our earth
  • w23857980
    w23857980 4 месяца назад @Mark Plott , not
  • Fred Pfeifer
    Fred Pfeifer 4 месяца назад Yes, Tesla and Elon Musk definitely has a great chance in China, for China unlike the US will not send its 51st province to kidnap Elon Musk or Tesla's CFO or CEO.
  • Mark Plott
    Mark Plott 4 месяца назад @ CNBC - TESLA has ZERO Competition Worldwide. Shure, Japan and GM/Ford can Outproduce Tesla in ICEV but CANT in Electric Cars. Same for China, they have manufacturing for EV , but the Chinese EV are Largely Compliance and Low End EV, not a Compact Executive car like TESLA is. the Tesla Shanghai GF will be Important going foreward. and they will Initially make the MID Range and Model 3 BASE there, as well as Upcoming model Y. However, KEY to Tesla success will be IMPORTING its Dual Motor and Performance edition at a Premium Price, the Chinese that can Afford a $60,000 Performance car will be Willing to Pay the TAXES and Import fees. In the Future, as production ramps up at GF3 , they Might produce Dual Motor and Performance model 3 there, to reduce cost.
  • mike zhang
    mike zhang 4 месяца назад @Alex F because only idiots like you do not think so
  • w23857980
    w23857980 4 месяца назад no
  • billionaire prince 11 yrs old
    billionaire prince 11 yrs old 4 месяца назад Yes if he implements the apple strategy
  • jjj jjj
    jjj jjj 4 месяца назад (изменено) This report is highly misleading. Model S and X have been selling there for a while and there is nothing to speculate about those. Model 3 and Model Y do not have direct competitors from local players or international. NIO ES6 starts at over 30% more than Model Y and Model Y will have 3 rows of seats to compete with things like Ford Explorer and Toyota Highlander. Model Y costs as much as a Bolt but competes with mid-size SUVs, that's the gap between Tesla and others. International brands will have lesser SUVs at twice the price before tariffs. The China market is gigantic and Tesla has less than 0.1% share, where are the risks? It's all opportunity, they literally have nothing to lose.
  • Kylin Soong
    Kylin Soong 4 месяца назад Tesla  not has a real competitor in china, because Tesla is just like Elon Musk, what are so special and attractive for some people, In Beijing I can see lots of Tesla in the road.
  • 我是181
    我是181 4 месяца назад CNBC Taiwan is not part of PRC , correct it please
  • Organic Trend TV
    Organic Trend TV 4 месяца назад Yes, ofcourse!
  • Abdelhak Yacoub
    Abdelhak Yacoub 4 месяца назад tghirou mennou hada makane.... tehahna
  • Picture and Film
    Picture and Film 4 месяца назад Hopefully Tesla will not go through what Boeing went through... or German trains........
  • 美国老爹
    美国老爹 4 месяца назад No, because China will "steal" all Tesla technology per US assessment and make their own EV better than Tesla. Just joking.
  • Dustin Gliko
    Dustin Gliko 4 месяца назад The addition of Chinese Manufacturing to the mix should eliminate the issues Tesla has producing vehicles in the U.S.
  • Nightcor EDM
    Nightcor EDM 4 месяца назад @Alex F taiwan is a province of China
  • NeoGeoSNK
    NeoGeoSNK 4 месяца назад Yes, despite all the conflicts between the China and US, a lot of Chinese love Tesla !
  • P L
    P L 4 месяца назад Of course they do. Lots of competition in gas cars but BMWs and Mercedes are still sold there right?
  • OceanicBloom140
    OceanicBloom140 4 месяца назад I like this electric race, it’s forcing companies such as Tesla to rapidly expand in order to remain competitive. In turn forcing other companies to also expand.
  • 本尊孙笑川
    本尊孙笑川 4 месяца назад @Alex F Or taiwan should be part of Japan? NMSL
  • Tom Kitta
    Tom Kitta 4 месяца назад If US - China relation deteriorate Tesla in China has little chance - or shall we say none. Apple will also suffer. If relations improve or become great again Tesla is almost guaranteed a place in China as a luxury EV maker. It has little chance of breaking into budget sector, nor desire to do so.
  • David Beppler
    David Beppler 4 месяца назад Tesla is already popular in China and Tesla builds the best EVs. They will have no problem selling there. Think about it. The ONLY safe car built in China.
    SLEVIN SHAFEL 4 месяца назад yes because its the appel of electric cars. they "invented" it. Tesla its prestige. because all can put a motor and batery pack them and rc car toys.
  • Karl Stoner
    Karl Stoner 4 месяца назад @Alex F Because it is part of the China, as is recognized by UN, US and most of the countries.
  • Kent Yee
    Kent Yee 4 месяца назад Tesla has a better chance than any other auto maker like GM, Audi, and other outside auto maker. As you said, Tesla can profit 100% of each car sale while other brands can’t. They are partnering with China and you have to understand Audi e-tron and others are only “PREDICTING” to come out at the end of 2019. Tesla already has a product. AND didn’t Audi recently say they may delay the E-TRON release because they know they can’t make a profit until batteries are cheaper. It’s harder to predict against Chinese cars, I think Tesla can. You and others say Tesla to China is a nostalgia of American product, a great product and you know all China engineers are copying or you can say they have a highly willingness to learn from Tesla. Or you can say there are many Tesla Chinese fanboys out there, so they do have a chance.
  • Neo Zhou
    Neo Zhou 4 месяца назад Alex F Because Taiwan is part of China
  • iSputnik
    iSputnik 4 месяца назад you do realize that, now that tesla is opening a manufacturing plant in china (construction underway, open by end of 2019), they no longer have to worry about additional taxes. apart from that, cost of procuring raw materials, and cost of transportation will come down significantly. In fact, i expect a Tesla made in china to be cheaper than a Tesla made in U.S.A
  • S H
    S H 4 месяца назад (изменено) @Tag Makers Pet Tags all female reporters & commentators, need I say more? Except Theranos, Yahoo, Campbell, HP, eBay, GM, P&G...etc.
  • S H
    S H 4 месяца назад There's NO Competition in the Best EV & batteries tech. Tesla is way ahead. They said the same thing about Netflix for years, there's no competition comparable.
  • FAB Group LLC
    FAB Group LLC 4 месяца назад I think it's funny that people keep asking if Tesla should be worried about competition. They welcome it: That's their mission. All this talk about legacy brands being able to easly out-compete Tesla's achievements is interesting. From what I understand, Tesla may be the only non-Chinese manufactures of EV's to even be able to make a profit on their cars. The other's are producing loss leaders.
  • Aman Singh
    Aman Singh 4 месяца назад I think there is less hype about Tesla in China... Cause of ban of YouTube and Facebook so... Local players will give Tesla stiff competition... In my opinion
  • Zhaoyu Zhong
    Zhaoyu Zhong 4 месяца назад BYD is catching up real fast
  • Mode Liukas
    Mode Liukas 4 месяца назад @Thomas In the end its not Tesla's and Musk's primary goal though, Musk says overall goal is to convert the World To Electric Transportation and Tesla is doing exactly just that staying competitive therefore they had to put their foot in China eventually.
  • Paul Ryan
    Paul Ryan 4 месяца назад Tesla can succeed but they should use the best available Chinese talent or be prepared to compete with them. China has a numerical advantage in Brain power which has helped it to develop on a timeline that has surprised many. Never underestimate China.
    JAISON JOSE 4 месяца назад Tesla is Tesla, and nothing has to be a real competitor for Tesla for half a decade. They are way ahead of everything.