By CCN.com: Tesla’s Chinese subsidiary has announced an event planned for Friday sparking speculation on what the electric car maker is up to in the world’s biggest auto market. The teaser was published on China’s social media platform Weibo and the event is set for Friday.
While Tesla China did not let slip on what to expect, here are five possibilities:
Currently, the cheapest version of the Tesla Model 3 costs 377,000 yuan (over $54,000). For a car that’s supposed to be a mass-market model, this is not competitive in a country where there are electric vehicles (EV) starting at under $9,000.
According to Bloomberg, China’s domestically-produced Model 3 is expected to carry a pre-subsidy price of between 300,000 and 350,000 yuan.
At the moment all the Model 3s that Tesla sells in China are imported from the U.S. Consequently they don’t enjoy subsidies from the Chinese government making them more expensive than comparable models produced domestically. They are also subject to import tariffs which could increase as trade tensions between the U.S. and China rise.
Tesla announced it was setting up a factory in Shanghai last year in a bid to enhance its competitiveness. However, Tesla did not reveal the exact date it would commence production. This could be of the planned event as commencing local production is the only guaranteed way to be price-competitive.
By producing locally not only will Tesla be able to avoid import tariffs and enjoy government subsidies, but will also speed up the rate of deliveries. The electric car maker will also be in a position to offer design and features that suit Chinese tastes and preferences.
Two months ago as Tesla ramped up its plans to produce the Model 3 in China, it was reported that the electric car maker was shopping for a battery maker. According to Reuters, Tesla held talks with Chinese battery supplier Contemporary Amperex Technology in March.
In January it had also been reported that Tesla had inked a preliminary deal with Tianjin Lishen Battery Company Limited. It is possible that with production set to start in China, Tesla might have already picked a battery partner.
So far the electric car maker has only committed to producing the Model 3 in China. With the world’s second-biggest economy now the top auto market (for both EVs and gasoline vehicles), Tesla would be missing a big opportunity if it only produced one model in China.
This is so given that China’s upper middle class is growing rapidly and thus is a ripe market for Tesla’s higher-priced vehicles such as the Model S, the Model X and the Model Y.
And with the trade tensions between the U.S. and China not looking like they will be resolved soon, Tesla has yet another incentive to move some production out of its home country. Additionally, other automakers are increasing their investments in the manufacturing of EVs in China. Tesla will not want to be left behind.
Count this as wishful thinking though there are supporting arguments for it!
For one, Tesla’s CEO Elon Musk already appreciates the potential of cryptocurrencies. Earlier this year, Musk stated that ‘crypto is a far better way to transfer value than pieces of paper’.
Additionally, China seems to be relaxing its restrictions on cryptocurrencies. Recently, the Bank of China declared owning bitcoins and peer-to-peer trading of them was perfectly legal.
So while Tesla accepting bitcoin in China would be surprising, it wouldn’t be completely unfounded!