Tesla Denies “Leaked” Document Stating The Automaker Will Build EVs In China With Unspecified Partner

8 months ago by Steven Loveday 35

Tesla manufacturing coming to China?

An apparent plan between Tesla and an undisclosed Chinese partner suggests that the electric vehicle maker is moving forward with the intent to build cars in China.

Way back in October of 2015, Elon Musk announced that the company would build China’s Tesla Model 3 vehicles in China. At that time, he didn’t specify any details. However, according to Reuters, the plan was to establish a Chinese-based manufacturing partner.

Tesla Signs $9 billion agreement to build factory in China

Call it Déjà Vu, but this type of announcement happened over six months ago and Elon Musk denied it.

Several months later, reports claimed that Tesla had signed a $9 billion agreement with the Shanghai government-owned Jinqiao Group to begin work on a factory in the country. Elon Musk quickly took to Twitter to dispute the false claims.

Now we have round two of the situation. According to Caixin (via UPI), the newly released (or leaked if you will) document clearly shows a “50/50 joint venture” between Tesla and an unnamed Chinese manufacturer. Included is a contract stating that the plan includes a factory in Shanghai, with ambition to build a half million vehicles per year.

Following suit with previous plans, the report shows that the vehicles built in China, would be specifically for the Chinese market (most likely Model 3 vehicles).

While Tesla’s chief of operations in Asia, Ren Yuxiang, recently publicized the company’s plans to open a research and development base in China, no official word has been revealed. Once again, a company spokesperson denied the new report.

Tesla is deeply committed to the Chinese market, and the rumors that are circulating are untrue,” Tesla China said in response to the story.

Regardless of the validity of today’s news, or if Tesla was close to getting a China production deal in place, it is only a matter of time before Tesla will be compelled to move forward with the plans. Having a local factory will alleviate the automaker from a 25% tax on imported vehicles, and will reduce the considerable stress at the company’s Fremont factory and the Gigafactory, related to the Model 3 timeline.

Source: Caixin via UPI

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35 responses to "Tesla Denies “Leaked” Document Stating The Automaker Will Build EVs In China With Unspecified Partner"

  1. Some Guy says:

    Absolute stupidity.

    Not only does this deprive Americans of jobs, it gives away Tesla’s EV design and manufacturing know-how to the thieving Chinese.

    1. ModernMarvelFan says:

      “it gives away Tesla’s EV design and manufacturing know-how to the thieving Chinese.”

      What happens to Tesla free sharing of all of its IPs with anyone who wants to build EVs?

      1. EVA-01 says:

        I believe the IPs were about charging, not the blueprints to their vehicles.

        1. ModernMarvelFan says:

          No…

          It was “free for all” as Elon said as long as they agree to use them for building EVs and promise not to sue Tesla in return.

          1. And still no takers after 3 years! That should tell us something about how important Tesla’s IPs are.
            Making EVs is the easiest. Just look at the millions of EVs sold in China.

            1. Paul Smith says:

              How do you know if some of those aren’t in every EV being now built? Open source means not having to get Tesla’s permission to use them.

              1. Very easy! You would have seen
                * 10 articles written by click bait Tesla fan journalists for each use.
                * Tweet from Mr. Musk.
                * A huge wall chart and a big piece from Fred Lambert over at Tesla Pravda.

                You couldn’t miss it from Mars!

              2. zzzzzzzzzz says:

                It isn’t what “open source” means.

          2. Pushmi-Pullyu says:

            The fine print in the terms of use (see link below) of Tesla’s “All our patent are belong to you” promise was that anyone who used them must also agree to equally share their own patents on an open-source basis.

            That being the case, I personally don’t find it at all surprising that no major auto maker has taken them up on it, nor is any likely to.

            But hey, gotta give the FUDsters credit for manufacturing a plausible-sounding argument here, in claiming “Nobody wants Tesla’s patents.” Give the devil his due.

            Certainly much more convincing than most of the B.S. posted by anti-Tesla FUDsters, which is so absurd and so obviously B.S. that I find it insulting. Do they actually think people are so clueless that they would swallow their bilgewater?

            https://www.tesla.com/about/legal#patent-pledge

            1. Someone out there says:

              “The fine print in the terms of use (see link below) of Tesla’s “All our patent are belong to you” promise was that anyone who used them must also agree to equally share their own patents on an open-source basis.”

              No this is incorrect. What it says is that you can use their patents as long as you don’t then turn around and sue Tesla. If you do then your rights to Tesla’s patents are forfeit.

              That is indirectly an admission for Tesla to use your patents, since if Tesla does that and you sue them you lose Tesla’s patents. However, it is not a requirement that you open up your own patents for everyone, the deal is only between Tesla and you. If for example Ford starts to cooperate with Tesla on the superchargers, it doesn’t mean that suddenly GM can use Ford’s patents.

              This is pretty reasonable, if you want to work with Tesla’s technology you can’t then with the other hand sue them. Partners working together in good faith usually don’t do that anyway so it shouldn’t be a problem.

    2. The Guy says:

      Dude, i’m an american and i am first to admit we don’t have the qualified talent to fill EV factories. Why is that? And Elon has deliberately shared his technology with China to get foothold there I think you need to step outside, look back at america and see the real world before responding with a closed mind.

      1. SparkEV says:

        US has enough talent to fill any EV factory, or any position for that matter. It all comes down to matter of cost.

        I’ve hired some foreign workers in US, and their quality was far better than US counterparts of similar experience. They’d have to be since they have to be the cream of the crop in their country to be in US while US worker is just average.

        I’ve also worked with foreign company that hire locals in their country. Their quality was far inferior to US, which suggests average foreign worker is inferior to average US worker, at least the field I’m in. But this was far cheaper than other options.

        1. G2 says:

          What field is that, SVP?

      2. realistic says:

        “we don’t have the qualified talent to fill EV factories”

        Nonsense.

        Do you travel outside the US much? I do much less of it. But when I do and I’m slouching around the airport lounge in Shanghai, Mumbai, Manila, etc., somewhere between 1/3 and 1/2 of the tired old white guys are doing what I’m doing: dealing with American-originated parts sourcing to low-cost builders. The sourcing activity ranges from site surveys to process education to resolving quality issues.

        NONE of the candidate sources exceed the originating location in skill or know-how, and bloody few are our equals. It’s all about cost.

    3. JeremyK says:

      That’s a pretty strange world view. The cars produced in China will be for China (Asia) domestic market. How are those “American” jobs? Much of the profit will still go to the parent company (Tesla) located in the US.

      You can’t (realistically) sell cars in China if you don’t manufacture them there.

      Next issue is developing a supply base. China requires a significant amount of local content. That should be a lot of fun for Tesla’s supplier quality engineers. On the bright side, so many EVs are already being sold/produced in China that there is likely a significant amount of experience, whereas a few years ago there would have been almost none.

  2. Get Real says:

    Agree unlucky.

    Maybe the Trumpster should be working on this injustice rather then banning people and building a wall?

    Anyways, Ikea wants in on that wall building business:

    1. mx says:

      Trump should institute exactly the same import tax on Chinese cars: 25%.

      1. ModernMarvelFan says:

        The only cars that are build in China and shipped to US are:

        Buick Envision and Cadillac CT6PHEV (yet to be released).

  3. Anon says:

    China has already changed policies for EV Imports / Taxes…

    https://www.theguardian.com/environment/2014/jul/10/china-exempts-electric-cars-from-tax

    So again, these highly speculative articles concerning Tesla, do little but generate clicks.

    1. unlucky says:

      That’s not the tax that locating locally avoids.

      All car purchases (except now EVs) are taxed with that tax whether they are domestic or foreign-made. There are other taxes for imported cars which building locally would avoid.

      Although you can’t build locally, the law requires local ownership of factories. So you have to go into a joint venture.

      It’s unclear to me why we let China trade on this basis. It isn’t fair. Chinese companies can own factories and produce in the US, why not the reverse?

      1. DJ says:

        Because Americans like cheap stuff…

      2. ModernMarvelFan says:

        “It’s unclear to me why we let China trade on this basis. It isn’t fair. Chinese companies can own factories and produce in the US, why not the reverse?”

        It is the result of WTO negotiation. If you don’t let “developing countries” certain advantages, then NO developing countries would trade with developed economy since developed economy would crush all “local” companies in developing economy.

        The system appears to be unfair for the developed economy but it gives the developing countries a chance to develop their own technology and economy which will in turn buys more goods/services from the developed economies.

        It is part of every trade negotiation..

        The down side is that you are building up your future competitors. The up side is that 1.3 Billion poor people with no money buying your stuff will slowly have more cash to buy more of you good/services in the long run. It is designed to benefit both eventually.

        As far as trade deficits are concerned, it is just “paper money”. China gives us goods produced and we gave them Billions of papers that says “IOU” on it…

        1. Anthony says:

          At what point do we say that China is no longer a “developing economy”? That they should no longer enjoy the types of advantages that we give to developing economies.

          Right now China’s GDP (PPP) per capita is about 30% less than Mexico. Are US automakers required to form joint partnerships with local auto manufacturing companies? My point is that they’re working their way from developing economy to a developed economy. The Trumpian attitude would be that at some point we would be wise to call them on it.

          1. ModernMarvelFan says:

            According to WTO negotiating terms, those “favorable terms” do expires. Some of them are set by duration in a fixed timeline and some of them are linked to certainly economic metrics.

            It isn’t open ended as some have claimed.

        2. SparkEV says:

          That “favorable terms” does not give any advantage to developing countries. It just means freer market. Freer trader is equitable trade not favoring either party.

          If the market is truly free, the developing countries would produce similar product at lower cost, and developed countries would have to counter that with innovation (automation, new product, etc). But with so many protectionist policies, both by developing and developed countries, “deals” must be worked out by corrupt politicians to decide how much free trade will occur.

          Going to this article, government forcing foreign companies to “partner” with local is not free trade. It’s a bad deal from free market perspective.

  4. Someone out there says:

    So where is Tesla getting these $9 billion from?

    1. Pushmi-Pullyu says:

      I’m no “financial guy”, but as I understand it, industrial lenders (aka “Wall Street”) are eager to lend money to growth companies with a proven track record and an optimistic outlook for the near-term future.

      The fact that Tesla has such easy access to capital must drive the anti-Tesla FUDsters absolutely crazy! It absolutely undercuts every one of their constant, unceasing, brain-dead assertions that Tesla is running out of money and will collapse soon. 😆

      1. Someone out there says:

        Unfortunately the Wall Street people don’t just throw money around willy-nilly. Tesla has a proven track record of losing money and that’s the kind of record the Wall Street people usually don’t like.

        1. realistic says:

          Someone:

          Having been a TSLA long from mid-$90’s to the Sept ’14 high, I lost faith in the company’s ability to maitain a solid financial base. (BTW: just to be clear: no, I didn’t triple my investment. I sold off on the way up and bought some “protection” during one of the swoons. But it was still a magnificent play.)

          I’ve dabbled in short-term TSLA trades (on boith sides) since then in unimpressively small amounts because I find it mostly unpredictable.

          I do agree that Tesla has been completely unable to self-fund its business and has no visible path to that condition, Model 3 and fancy roof tiles or not. But while TSLA bears have been uncannily correct in surmising the company’s awful finances, they are continually battered by the company’s ability to raise money. Despite a growingly negative cash flow (save one quarter saved mostly by delayed payables), they can raise capital. I consistently use the phrase “Tesla doesn’t MAKE money. They RAISE money.” It’s true. But the bloc of institutional and retail shareholders don’t care, and they willingly buy new shares (especially when an abnormally high short float helps to prop up the price).

          Also, sophisticated short traders like the arbitrage opportunities created when companies like Tesla (with volatile share values) issue Convertible Bonds. They are a great hedge to short traders. And guess who raises money when they issue Convertible Bonds? The issuer and the underwriters (e.g., Tesla and “Wall Street”.)

          If you’re rooting for Tesla, you should love the active short trade in their stock. It helps a company that doesn’t MAKE money to RAISE money, and they’ll keep doing it unless something awful happens.

  5. Tom Koogle says:

    How about if Tesla sets up a factory in Taiwan? China believes it is part of China and it could be used to manufacture for all of Asia and the Pacific markets. Tesla would have better control of the factory.

  6. Pushmi-Pullyu says:

    I find the timing of this supposed “leak” to be more than a bit suspicious. It comes just when Tesla’s stock price is peaking and “short” interest seems to be reaching a desperately frenzied pitch, if all the anti-Tesla FUDster comments posted to InsideEVs is any indication.

    I’m not suggesting that Tesla itself started this rumor to send the stock price higher, but perhaps someone did.

  7. Foo says:

    Gotta love how they lined up Elon’s head with the “E” in the Tesla logo in the background in the interview video.

    Get it? E. Elon.

  8. Kdawg says:

    IF Tesla built a Chinese Gigafactory, would their chemistry get the tax incentives? I forget the details, but I thought only a certain chemistry (the popular Chinese one) was getting the Gov. subsidies.

  9. ItsNotAboutTheMoney says:

    I have no problem with Tesla building cars for China in China. Maximizing local manufacturing is good policy.

    It’s the joint venture rules that had been the problem.

  10. Jason says:

    Shock, horror, car company looks to build factory in China!

    Pretty sure Apple is an American company and pretty sure they got a factory in China. No-one seems to have a problem with that.

    Hopefully Tesla are not going down this path yet, but in order to keep cost down you got to go where the cost is lower, and that my friends is places like China, India, etc. Well done Tesla being able to build an all American car, buy maybe the mass market version will require cheaper inputs.

    Any way the article states it is Chinese manufacture for Chinese consumption, so the rest of the world would still be American made.