Tesla is looking for ways to secure its foothold in the Chinese auto market. Specifically, the California-based electric car maker wants to start building cars in the country that has the largest auto sales market in the world. Given that electric vehicles are in high demand in China, this seems like a natural move, but CEO Elon Musk admits there are a number of challenges to overcome before a China-based Tesla factory could become a reality.
Tesla’s Model S sedan is already available in China as an import, supported by a Supercharger network of 1,400 stations throughout the most populated parts of the country. The newly released Model X will reportedly be sold in China by mid-2016, which coincides with deliveries of the all-electric SUV’s in the United States and Europe. This simply isn’t enough for Tesla, though. CEO Elon Musk wants to begin building the electric vehicles in China to reduce the luxury cars’ costs.
Musk says this could help cut the cost of a Tesla by up to one-third and, as one might imagine, that could lead to a lot more sales. The price currently starts at around $76,000 in the United States, but the same car costs the equivalent of $106,000 in China due to shipping and import fees. A more affordable Tesla could help the company grab a larger share of the country’s 20-million-car annual sales market.
There’s a catch, though. China doesn’t allow foreign car makers to just move in and set up shop. In order to begin manufacturing its luxury electric cars in China, Tesla would have to partner with a Chinese automaker. That presents such a challenge that Tesla reportedly asked Obama administration officials to broach the subject with Chinese President Xi Jinping during Obama’s visit there last month. There’s no word on whether that conversation took place.
Although the Wall Street Journal initially reported that Tesla planned to begin Chinese manufacturing operations within the next two years, that timeline has been retracted. Instead, WSJ confirms only that Tesla is in discussions with officials in China, and will hopefully have some news for the world soon.