Tesla May Form Joint Ventures With China’s Lifan And/Or Chang’an Automobile Groups

MAY 1 2015 BY ERIC LOVEDAY 15

Tesla Model S In China

Tesla Model S In China

Lifan Electric Car

Lifan Electric Car

We admit, we do enjoy it when one of our suggestions to an automaker later becomes a possibility.

Awhile back, we suggested that, in order to succeed in China, Tesla Motors would have to enter into a joint venture partnership with a Chinese automaker.

Well, there are now reports from April suggesting that Tesla is indeed looking into forming a Chinese joint venture.

From Want China Times, we discover this:

US electric car marker Tesla Motors may partner with auto manufacturers in Chongqing to build factories, after reportedly sizing up Chongqing-based auto manufacturer Lifan Group and Automobile Group on March 16, reports Shanghai’s National Business Daily.

Chang'an Car With Models

Chang’an Car With Models

The reason for the joint venture is to drive down Model S prices in China.  As an import, the Model S is slapped with some hefty fees:

“Tesla has two models available in China, the Model S85 priced at 734,000 yuan (US$118,700) and the Model SP85 (Performance) priced at 852,500 yuan (US$138,000). The company sold a fewer-than-projected 2,500 electric cars in China last year given the big price difference between China and overseas markets.”

As we stated in the previous article, a joint venture is almost necessary to do automotive business in China.  Even BMW is aware of this:

“BMW has worked with Shenyang-based Brilliance Auto Group for years and the price of their China-made cars is no longer affected by tariffs. Therefore a joint venture factory becomes the first-priority option for Tesla to turn profitable, a market analyst said.”

There’s this issue too:

Besides this, Tesla’s battery charger is not in line with China’s national standard, disqualifying it from the policy on the exemption of vehicle purchase taxes for new energy vehicles published last August. It would save 70,000-80,000 yuan (US$11,300-$13,000) on each car according to its selling price if it was on the list, an analyst said.

So, all sorts of problems for Tesla in China, but the solution is rather simple actually: form a joint venture with a Chinese automaker.

Want China Times says this of Lifan and Chang’an:

Lifan Group has been known for developing new -energy vehicles over the past few years and its self-designed chassis-replacement technology was granted a national patent last April. Chang’an Automobile Group meanwhile announced its new-energy vehicle strategies earlier this year.

Hey Tesla, form a joint venture with a Chinese automaker.  You can thank me later.

Source: Want China Times

Categories: Tesla

Tags:

Leave a Reply

15 Comments on "Tesla May Form Joint Ventures With China’s Lifan And/Or Chang’an Automobile Groups"

newest oldest most voted
Lensman

“Tesla’s battery charger is not in line with China’s national standard, disqualifying it from the policy on the exemption of vehicle purchase taxes for new energy vehicles published last August. It would save 70,000-80,000 yuan (US$11,300-$13,000) on each car according to its selling price if it was on the list, an analyst said.”

This is the first time I’ve seen this reported. Thanks, Eric! And thanks to Want China Times.

Stephen

What does that statement mean. more details please InsideEVs

Priusmaniac

No give in necessary.Let them buy other cars if they want to. If they want a Porsche they buy it if they want a Tesla they will buy it to. No need to get into retro engineering bad deals. A future Tesla factory in China when the numbers justify it is something else. But that forced join venture policy should not be accepted since it doesn’t apply to Chinese made goods or Chinese US based production.

sven

I’m surprised no country has filed a complaint with the World Trade Organization against China for it’s blanket 25% import duty on all imported cars and trucks, and for forcing foreign auto manufacturers who want to build factories in China to avoid the tariff into joint ventures with Chinese companies. What’s the point of the WTO if countries don’t fight these abusive trade policies.

The U.S. filed a complaint with the WTO against China alleging that China gave unfair subsidies to its domestic solar panel manufacturers. The U.S. won that case, by the way.

JakeY

Rather than the Model S, I think this move is more for the Model 3. They definitely can’t sell in large volume without having a factory in China and they can’t have one in China unless they agree to a joint venture.

Mike777

Game Theory 101: MATCH THEIR DAMN FEES.

ALL CHINESE AUTO IMPORTS SHOULD HAVE MATCHING HIGH US GOVERNMENT FEES.

Steven

Who holds the majority of US debt?

China.

For all intents and purposes, they are in control of this rodio. If they don’t like it, it won’t happen.

ffbj

They do hold a lot of U.S. debt but have recently been surpassed by Japan.

ffbj
CDAVIS

China Corporate Espionage Boom Knocks Wind Out of U.S. Companies:
http://www.bloomberg.com/news/articles/2012-03-15/china-corporate-espionage-boom-knocks-wind-out-of-u-s-companies

Any USA based company that relies on “proprietary” IP line manufacturing methods just makes the spying more convenient for China when the factory is inside China (supporting local spies cheaper than foreign based spies).

Tesla has supposedly open sourced all its IP related to electric cars but I wonder if that includes line manufacturing IP?

ffbj

I think Musk’s underlying mission to get as many quality ev’s on the rode as soon as possible is complicated in China.
On the one hand if you want to play on their court you have to play by their rules, which in this case leads to more of a Hobson’s choice, due to the mission of Tesla.

If on the other hand you choose not to enter a joint venture in China, your cars cost more, and fewer ev’s hit the streets.

Rick Danger

Elon: write China off for now. You’re going to have your hands full just building and selling Models S & X for the next few years, and it will take you years to catch up with Model ≡ demand just in N America and Europe. By then the Tesla marque should have such caché that Chinese will wait in line to buy one. Like everyone else.
You don’t need the aggravation right now, you’ve got more important things on your plate.

Driverguy01

It’s in Tesla’s DNA to convert the world to electric everything as fast as possible.
Musk said it in many videos and articles we’ve all seen.
So a joint venture with anybody who could help accelerate this transition would be very desirable to reach that endgoal faster, would it not?

Speculawyer

I think the rest of the world REALLY needs to start leaning on China with regards to their trade policy. They are no longer the poor destitute nation they once were.

I don’t think it is really fair for them to force outside entities to form local joint ventures in order to be able to sell in China. Especially considering how intellectual property is so very often not respected in China.

Nathanael

They ain’t stupid and they can’t be forced.

What we can do is to force them to form joint ventures to sell their stuff in the US, or slap them with 25% tarriffs.

“Free trade” is overrated.