Tesla Model 3 Reservations In China Higher Than Any Country Other Than US
As long expected, it appears that Tesla is now actively considering construction of an assembly factory in China — following the emergence of strong Model 3 demand in the highly populous nation.
Tesla Model 3 reservations in China were actually higher than in any country in the world other than the US, according to Tesla’s Asia Pacific head, Ren Yuxiang — making it appear that the company’s noted interest in the market has been well placed.
Tesla’s Chief Technology Officer, JB Straubel, was recently quoted (while participating in a panel discussion at the International Transport Forum in Leipzig, Germany) by China Daily as saying that, with Model 3 interest growing, the development of a factory in China was making more economic sense.
Gas 2 provides more:
Last fall, Elon Musk set of a firestorm when he was quoted as saying all Model 3 cars would be manufactured in China. He was quick to point out that a translation error was responsible for the mix up, but tweeted that a Chinese factory was definitely being considered.
…China is a tricky market for all manufacturers. Foreign companies are often required to partner with a local company. Such partnerships often involve more of a transfer of technology than Tesla may be comfortable with. However, in order to avoid significant import duties that drive up the price of cars made outside the country, other global manufacturers have found it necessary to form such alliances. Tesla is said to be exploring partnerships with several Chinese automakers, but has not yet concluded an agreement. Nor has it decided the best place to locate its factory in China. Another unanswered question is whether it would only manufacture the Model 3 in a Chinese facility or also begin making its Model S sedan and Model X SUV in China as well.
Tesla is also considering the development of a facility in Europe, of course, eventually. Given the company’s plans for the rapid scaling up of production for the Model 3 launch, one would presume that there aren’t enough funds lying around to do both immediately. Which comes first is an interesting question — Europe is a huge market for Tesla, but conversely, China represents a huge opportunity for sales growth.
Photo by Kyle Field for CleanTechnica
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The timing of Tesla manufacturing in Europe and China will depend on the successful roll out of the Model 3. Once it is well and truly put to bed and the expected model 4 is planned and released, then they should be in position to move into both areas.
I feel an EV in the $20k price range will have a huge demand exceeding the Model 3, and will dictate more facilities to fill the sheer number of orders expected.
Tesla would be required to “partner” with a Chinese company. There are lots of downsides of that, including the Chinese company ripping off Tesla’s trade secrets.
But there’s one upside: the Chinese company would be forced to put in very large amounts of its own money. So Tesla can build a Chinese factory without spending Tesla’s money, most likely.
China’s partnering system – all about dangling the carrot of short term gains in exchange for handing over tech and thereby ensuring one’s eventual competitive irrelevance.
Regarding the tech. Software is “shipped”, so it’s not shared. Much of electronics are outsourced. Batteries will most probably come from Japan (Panasonic homeland). So IMHO no – China will not get enough tech to clone Tesla. Some transfer of tech will be done but on safe levels. And EM is not scared of competition.
But then there can happen transfer in other way. Whatever we say about China tech they are good at efficient and flexible production of things. And that is exactly what Tesla is trying to master right now.
I agree that the software is what defines a Tesla. As a significant amount of the Tesla drive components are built in-house, those might also be classified as proprietary, but someone else could build 95% of the frame and body.
It all depends on how the deal is structured.
I’m not saying this won’t help China to compete. I’m saying it’s not as worrisome as often presented.
Could they do 95%? In terms of mass/size yes. In terms of importance? I doubt.
China buys Intel processors for their servers quite a lot, but can they do similar? No. Of course, Intel is not doing them in China… But some crucial elements can be shipped from States/Europe/Japan/Korea and hidden from Chinese partner in similar way. This will be separate company, so does not need to have access to all TeslaMotors technology.
After reading “Death by China” by Navarro and Autry, I tend to agree.
Between buying a Tesla and reverse engineering it and reading through Tesla’s publicly supplied patents what might be left for China to learn?
Reverse engineering is hard. It’s not so easy to do. It’s not only about what has been done, which often is much more than looking at the thing, but also about how to do this. I can look at 3D printed element all my life and will have super hard times to learn how to make 3D printer. As well with efficiency, reliability, quality – those are processes which are impossible to reverse engineer as they depend on culture of organization building it, not the product. Americans had lot of time access to Russian rocket engines and still are not able to do as good as Russia does. And don’t tell me that US military have any regard for IP.
Sometimes reverse engineering is harder than doing the stuff from scratch.
I’m not saying they haven’t learned anything but it’s not given that they know everything. And there are plenty of Tesla secrets for which they just never applied for patents. As Musk said “patent is lottery ticket for court case” – so he use them only when there is no other choice.
The Tesla is
1) A car body. Lots of companies build car bodies.
2) Batteries. Several companies manufacture batteries.
3) An electric motor. Companies make electric motors.
That’s the majority, close to totality, of the car. There is a need for software to control stuff, but other companies have built EVs. Hire a knowledgeable crew if there’s not already one inhouse.
China already has multiple EV manufacturers.
What sort of special sauce do you think Tesla might be hiding somewhere?
Just simple fact. Lot of companies are building electric cars. None of them is as good as Tesla.
That pretty much boils it down.
Now, sticking with the ‘good EV’ part. The good is how many batteries Tesla put in their car and where they put them. And the fact that they built a decent cooling system.
I’m missing numbers. From what I know US is about half the sales. After that came Europe (single market but not one coutry) with about 1/3 of sales. So rest of the world is left with about 17% of sales. Rest of world is basically China, Japan, Australia. How much of that is China? 12% of total? Still more than any single European country but much, much less than EU market. And those headlines sounds like if China was most important market. No it’s not.
Sure, bigger population = more reservations. I’d be interested in a per capita reservation figure or per gasmobile or something more representative for all places that could reserve the 3.
One of the main reasons I like Tesla is that it supports American jobs by making all their cars here! Personally, I would never buy a Tesla that was made in China, no matter how good the quality….it would be at the expense of American jobs. If Tesla wants to keep its “made in USA” consumer appeal, it should ditch the idea of making ANY Tesla’s in China. Tesla would be smart to position itself as an American hero by only exporting American cars not American jobs!…The world is hungry for Made in USA products. Let’s keep the jobs here and give the world what it wants….now if we could only get Apple to move their factories back!
Eric Buss
Founder
David’s Natural Toothpaste
That’s not realistic. Environmentalists correctly complain about the energy used to ship goods around the world, but the logical alternative is local production. And China is not the only country that’s made it very hard to import cars. What really matters is getting EVs established in China and India before they get hooked on gas cars and the sometimes pathological culture and economics that surround them. If they think EVs are normal and ICEs are strange, they’ll avoid the mistakes we made in the 20th century. If it means using Tesla’s brand prestige while giving in to China’s partnering mandate, it’s worth it.
I absolutely support all Tesla sales in the US being US-built cars, for the same reason.
Tesla says it wants to be the best manufacturer in the world. I’m assuming that means lots of robots, so I think they will be able to manage the labor costs wherever they choose to manufacture.
I think you should be proud of having quality products built in the US. But I’m not sure that ‘The world is hungry for Made in the USA products ‘. Frankly, I think the world doesn’t care where the products come from. What it cares about is that they are good.
I’d be happy to purchase a Tesla, irrespective of where it was constructed provided quality is consistent
remember all, TESLA has opened/given away most of their patents…..
You may have missed the part where they said a factory in China would be making cars FOR China, they would not be shipped back to the US, so only the Chinese would be buying a car made in China.
I get your point about exporting American jobs, but the reality of the worldwide economy, combined with China’s import restrictions, means that it is far better for the American company to have a factory in China for products meant for that region, instead of building the cars in the US and shipping them over.
Completely different situation from Apple, they manufacture everything in China for sale around the world. Tesla is looking at regional factories for regional distribution, which is actually better for the company, as they save money on shipping completed cars across the world (money that is staying in the US). Your point would be better made if you compare to a company that has regional manufacturing, rather than Apple.
#SpainLovesTESLA