Why Is China So Important For Elon Musk And Tesla?

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Posted on EVANNEX January 03, 2022, by Matt Pressman

Elon Musk always had a vision for Tesla in the Chinese market. And, according to the Wall Street Journal, “President Xi Jinping defiantly pledged to make China the world’s future innovation and industrial center. Key to his plan was Elon Musk.” 

“Mr. Xi viewed the South African-born entrepreneur as a technology utopian… and saw his Tesla Inc. as a spearhead that could make China a power in new-energy cars. Mr. Xi rewrote the rulebook to allow foreign companies sole ownership of auto ventures so Mr. Musk would open an electric-vehicle factory in Shanghai,” reports WSJ.

Furthermore, “Authorities showered him with cheap land, low-interest loans and tax incentives, expecting in return that Tesla would groom local suppliers and bolster lagging Chinese electric-vehicle players, say people with knowledge of the talks between Beijing and the company.”

It’s reported that, “Chinese leaders had grown frustrated with domestic electric-vehicle companies’ performance and saw Tesla as an opportunity to reset the country’s auto industry.”

In turn, “Tesla’s arrival whetted people’s interest in electric vehicles. The 2019 launch of the made-in-China Tesla Model 3 helped convince consumers such vehicles were a viable alternative to gasoline cars.”

Meanwhile, local EV automakers like NIO, XPeng, and Li Auto are now thriving since Tesla’s arrival. “Pre-Tesla, nobody believed that a Chinese brand could be riveting,” said Michael Dunne, chief executive of consulting firm ZoZo Go. Yet Dunne expects overall sales in China of new-energy vehicles to be roughly 3.1 million this year, more than double last year’s.


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