Next Tesla Gigafactory For Asia: Japan Or South Korea?

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Yahoo! Japan reported that other than China, Tesla may be considering gigafactory plans at sites in either Japan or South Korea. The article noted that Elon Musk was asked on Twitter about plans to build a new plant in Asia outside of China. “Yeah, but first we need to finish Giga Berlin and a second US Giga to serve the eastern half of North America,” was Elon Musk’s reply.

Yeah, but first we need to finish Giga Berlin and a second US Giga to serve eastern half of North America

— Elon Musk (@elonmusk) July 5, 2020

Yahoo! Japan noted that one media source (not linked or named) said that Tesla could choose either Japan or South Korea, both of which have a well-established automotive industry. With all of that said, I wanted to run a comparison and a short, hour-long poll to see which country, if either, people thought Tesla would choose for its next Asian Gigafactory.

Poll time! If Tesla were to build another Gigafactory in Asia and it was down to these two countries–Japan or South Korea–which country do you think Tesla would go for?

— GettingStoned.eth (@_GettingStoned) July 17, 2020

The results were in favor of South Korea. Granted, an hour was a short time for such a poll, there were only 55 votes, and there’s plenty of potential bias built into a Twitter poll, but it’s one way to think about the possibilities.

South Korea’s love for Tesla has been a popular news topic recently, whereas Japan has been slow to get into the EV revolution. However, let’s look at some more factors.

Japan

In Japan, as with China, there is an official Tesla Motors Twitter account, and even a dedicated blog for information related to Tesla Japan. To me, this means Tesla is very serious about its online presence in Japan. Japan is also the world’s third-largest auto market.

However, despite the fact that Tesla is dominating the EV market globally, in Japan, it’s not really that popular. This is partly related to the EV market not being very strong there, but also partly because foreign brands to not get much market share there. An article in The Japan Times said that in 2019, around 90% of the imported electric vehicles bought in Japan were Teslas. The total purchased was just 1,378 units, though. So, yes, Tesla is still dominant in a relative sense, but the real competition is established legacy automakers that produce gas vehicles by the millions.

https://twitter.com/ElonsWorld/status/1270712021357658114

In 2010, Japan was the first Asian destination that received Tesla vehicles — Roadsters were shipped from California to Yokohama. Even Elon Musk said that, “With its combination of high-level car enthusiasts and interest and appreciation of cutting edge technology, Japan is a natural market for the Roadster. The Tesla Roadster is a no-compromise (dakyo no nai) vehicle that makes no sacrifices on performance, design, or engineering.”

This was well before Tesla’s world domination of the electric vehicle market and its #1 position in the auto market as a while in some regards, but it shows that Tesla has a history with Japanese customers and an established presence there. This actually puts Japan in favor of being chosen as a site for the next Asian Gigafactory — especially if that could mean a lot more sales there.

Also, Japan is home to some of the most well-known legacy automakers, such as Honda, Toyota, Nissan, Suzuki, Mazda, Subaru, Yamaha, Mitsubishi, Isuzu, Infiniti, Acura, Lexus, and Kawasaki, just to name a few. Vehicles made in Japan have won numerous awards over the years, including European Car of the Year, International Car of the Year, and World Car of the Year.

In June, and then again more recently, Tesla overtook Toyota as the world’s most valuable automaker in terms of market cap on the stock market. Toyota sells far more vehicles than Tesla, but that could change in the coming decade. In such a case, it may eventually make sense for Tesla to have a factory in Japan just as Honda and Toyota have factories in the US today.

Japan is also home to Panasonic, which has been a key partner to Tesla for many years and helped build, fund, and now operate Tesla’s first gigafactory.

South Korea

South Korea may not have its own Tesla arm, as China and Japan do, but the country absolutely loves Tesla. Even though Japan is struggling to sell Teslas, or EVs in general, this isn’t the case in South Korea. As with Japan, Tesla dominated imported EV sales in the country — but it got far more vehicles than Japan. South Korea seems to be more open to the idea of EVs in general.

South Korea first. But Cybertrucks in Tokyo?! That’s pure cyberpunk!

— Debra (@ChelseaRhode) July 17, 2020

Omar Qazi explained that he believed South Korea would be picked if it was between the two. “Lots of battery production there,” he explained. One thing that South Korea is known for is its developments in battery technology. LG Chem is arguably the largest and leading EV battery company in the world, and South Korea is also home to a couple of other major battery producers, SK Innovation and Samsung SDI. In 2019, approximately 4.7 billion won ($3.9 million) worth of lithium-ion batteries were exported from the country.

As with Japan, South Korea has its own established automakers — Hyundai and Kia, most notably — and they have been more open to electrifying than Japanese automakers.

Tesla doesn’t have an established presence in South Korea from a corporate perspective, like it does in Japan. Sure, it has Tesla stores, but unlike China and Japan, it doesn’t have a dedicated corporate Twitter for South Korea nor a blog.

Japan or South Korea?

What do you think? Would Tesla choose Japan due to the size of the auto market there and the opportunity to perhaps get a much bigger foot in the door there? Would it choose South Korea because of existing popularity?

Would it favor Japan due to Panasonic’s presence there, or South Korea for certain supply chain and logistics advantages?

How much do overall political realities and the nations’ openness to foreigners and foreign companies come into play here?

Neither market is nearly as big as China’s — no market is — so a gigafactory would also be shipping cars elsewhere in Asia. Which markets have the most potential for Tesla sales and have closer proximity and ties to Japan or Korea?

Perhaps most importantly to many of us, how far off is a second Asian Tesla gigafactory?