China Xinhua News tweeted a photo of Elon Musk meeting privately with China’s powerful Vice Premier Wang Yang on Tuesday. The meeting took place without any prior announcement. Optics are exceedingly important in Chinese life. The fact that Wang met privately with Musk was deemed to have great significance by Li Anding, Xinhua’s former automotive reporter and currently a China industry analyst.
Li told Forbes that Wang has never met alone with any other automotive chief executive and generally prefers the dynamics of group meetings. The meeting suggests that Tesla enjoys a position of special trust and confidence within the Chinese government. China is the largest market for new cars in the world, but Tesla currently is disadvantaged by not having a factory in the country.
That means buyers of its cars must pay a 25% import tax, making it hard to to compete with locally produced products. Most of the world’s largest car companies, including premium car manufacturers like Mercedes Benz, have joint ventures with Chinese companies that allow their products to avoid the import tax.
Tesla says its 2016 China sales tripled to more than $1 billion in 2016. By comparison, its US sales were around $4,2 billion. Tesla has shown a strong willingness to work with the Chinese government to meet its “new energy vehicle” policies designed to reduce the amount of air pollution that afflicts its major cities, especially Beijing. The US has 10 cities with more than one million inhabitants. China has 106. Li says many of that country’s new electric car companies are experiencing problems, including long charging times and a poor ownership experience overall. Tesla has proven it has the answer to both of those concerns.
There is one other factor to consider. Vice Premier Wang is a former leader of Guangdong province, one of China’s major industrial areas. Tesla has been working hard to find a Chinese partner for the past two years. The meeting with Wang could be a sign that it will select a joint venture partner that has established links to the Guangdong region.
Source: China Xinhua News Photo credit: Twitter
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