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Tesla Not interested in Establishing its Factory in China

24 May

Tesla factory, Tesla China

The American electric car maker would be interested in establishing the factory when the EV demand in the country reaches a particular threshold

 

CTO of Tesla Motors J.B Straubel addressed the International Transport Forum in the German city of Lezpig by stating it will be logical for the American electric vehicle maker to establish a plant in China at a time when domestic demand reaches “critical mass,” reported China Daily. It is difficult to state which level of demand is the critical mass, but customers in the Chinese region gave the largest number of pre-orders amongst the extensive flood of demand for the forthcoming Model 3.

The comments by J.B, follow statements given by the company’s President of Global Sales John McNeil, who suggested that a factory in China could be built to boost the manufacturing capacity for Tesla Model 3. In 2015, CEO Elon Musk suggested that the automaker’s factory in the country could be established around 2019. And it was reported that the company has explored factory locations already in that region.

The EV maker hasn’t had a good experience in the country, though, failing to meet regional sales objectives as well as cutting down jobs in the last year. And growth would require various risks. China is boosting up its local electrically powered car manufacturing industry, backed by huge government subsidies targeted to solve the nation’s air pollution problem.

Next EV has turned into the most significant Chinese organization, but Tencent as well as Foxconn have also partnered to grab a share of the lucrative market. If the production of the mass-market EV continues to be centered in the organization’s factory in California, customers in China will probably have to wait for a longer time than buyers in the U.S.

That threatens, even with its new-aggressive manufacturing schedule; the company could find would-be Model 3 consumers in the country turn to its Chinese rivals instead. But establishing a facility in the country to counter that threat could prove to be quite problematic. Most global organizations interested in doing business in the country should work with Chinese partners, agreements that often require technology sharing.

That could turn into the most highly innovative organizations of the 21st century at a risk for destroying intellectual property theft, and even higher levels of Chinese rivalry. With Tesla’s intent to considerably heighten the production expectations for its EV fleet, the United Auto Workers’ motive to unionize the non-unionized Fremont facility has strengthened as USA Today has reported that on 19th May 2016, the president of UAW Dennis Williams stated the organization continued to be interested in unionizing employees.

In the last year, the company only sold around 50,000 Model X and Model S vehicles combined, and its goal for 2016 is 80,000 units. Compare that to  the objective to sell a half a million units in 2018. For meeting that objective the facility will need to manufacture 10 times more than what was done by in 2015.

The company has more than 400,000 orders of Model 3, which it needs to meet, so it doesn’t surprise us that the organization is interested in boosting manufacturing.

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Posted by on May 24, 2016 in Technology

 

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