Tesla Has Huge Opportunity To Capitalize On China’s Booming EV Market

Tesla Model S

JAN 28 2019 BY EVANNEX 13


When Elon Musk was on-hand for the launch of Tesla’s new Gigafactory in Shanghai, it was a groundbreaking occasion in more ways than one. The opportunity in China is enormous for Tesla. “China’s Association of Automobile Manufacturers (CAAM) reports that China sales of EVs grew 60% last year, reaching 1.26 million units,” reports Electronics Weekly. This means that China’s EV market is 3x bigger than the US EV market.

*This article comes to us courtesy of EVANNEX (which also makes aftermarket Tesla accessories). Authored by Matt Pressman. The opinions expressed in these articles are not necessarily our own at InsideEVs.

Above: China’s EV market is triple the size of the US EV market (Chart: Electronics Weekly via Statista / Source: InsideEVs, CAAM)

Trefor Moss elaborates in the Wall Street Journal, “Sales for electric vehicles in China are thriving, topping 1 million for the first time last year, helped by government subsidies and other favorable policies.”

With the launch of the company’s new Shanghai Gigafactory, “Tesla now faces a race to start local production to take advantage of robust demand for electric vehicles in the world’s biggest auto market…. [as] China is central to Tesla’s aim of graduating from niche startup to mainstream global auto maker.”

Above: A Tesla Model X in China (Image: Future Car)

“In China, Tesla has the opportunity to rev up, capitalizing on the government’s support for electric vehicles and well-to-do Chinese car-buyers who are captivated by Tesla’s technology and enamored of Mr. Musk’s entrepreneurial risk-taking,” explains Moss.

“It makes sense for Tesla to commit fully to becoming a leading EV brand in the world’s largest EV market,” says Bill Russo, chief executive of Shanghai-based consulting firm Automobility.

Above: Inside Tesla’s big move in China (Youtube: Wall Street Journal)

In addition, Tesla has a unique head-start. Moss reports, “Tesla was the first foreign auto maker to take advantage of a recent rule change allowing foreigners to own their China business, instead of having to work with Chinese partners as previously required.” That said, Tesla still needs to face-off against local competition. Can China’s EV companies really stack up against Tesla? We’ll soon find out.


Source: Wall Street JournalElectronics Weekly

*Editor’s Note: EVANNEX, which also sells aftermarket gear for Teslas, has kindly allowed us to share some of its content with our readers, free of charge. Our thanks go out to EVANNEX. Check out the site here.

Categories: Tesla

Tags: , , ,

Leave a Reply

13 Comments on "Tesla Has Huge Opportunity To Capitalize On China’s Booming EV Market"

newest oldest most voted

> “In China, Tesla has the opportunity to rev up”

“Rev up”, eh? Oh boy. Talk about choosing your words carefully…. 😀

China is> 50% of the global EV market measured by units, but the market is almost entirely below Tesla’s price point. The size of the market that Tesla can target is meaningful, but probably smaller than the US market. Certainly not 3-4x the size of the US market.

What exactly do you think is Tesla’s price point? If you think Tesla cannot compete on price with local Chinese car makers, you’re living under a rock. Tesla is a halo brand, like Apple, people will pay more for a Tesla just to show off they have one.

I would argue against you on this.

China is pushing very hard to get *all* new vehicles in the country to be EV as quickly as possible. That includes the top end of the market as well we the bottom end. China’s EV market is set to continue growing rapidly, much faster than the US market. Tesla’s addressable market in China is not the EV section of the market but the whole of the auto market. They will do very well in China.

Also, if you’re right about China’s EV market being mainly priced below Tesla’s, then you’re implying that Tesla has the middle-to-upper end of the EV market all to itself. That seems to be a point in their favour rather than against them.

From what I could find 2.2 million luxury class cars were sold in China in 2017 and luxury class market share actually expanded in 2018 as the overall carmarket shrunk slightly.

OTOH China’s is a bubble economy burdened under a huge dept that could collapse pretty easy, especially with Trump rocking China’s top heavy boat.

Smaller than the US market? Porsche sold more cars in China than US in 2018.

> In addition, Tesla has a unique head-start. Moss reports, “Tesla was the first foreign auto > maker to take advantage of a recent rule change allowing foreigners to own their China > business, instead of having to work with Chinese partners as previously required.” I know nothing of the politics behind this, but it really wouldn’t surprise me at all if the rule change was made specifically in order to allow Tesla to enter China. Of course, it hasn’t been portrayed as such, and I’m sure others can and will take advantage of the new rules, but the timing of it, and way that Tesla and Musk have been feted in China are very strong signals. The Chinese government is heavily in favour of Tesla and very keen to have them building cars in China as soon as possible. I can imagine a conversation where Musk told them that he wanted a factory there but wasn’t prepared to part-own it, and they worked out a way to make it happen. So why would China be so desperate to get Tesla that they would do that? Because of the halo effect. China has grand plans to electify the nation’s fleet… Read more »

“The Chinese government is heavily in favour of Tesla and very keen to have them building cars in China as soon as possible.”

It’s hard to imagine what could have caused you to reach this conclusion. If the Chinese central government really did have such a favorable view of Tesla, they could have granted an exception for all the tariffs and suspended all the red-tape rules which give Tesla so many problems and suppress their sales.

Perhaps you haven’t been following the “story” of Tesla long enough to remember when some rich Chinese got so frustrated over delays in getting their ordered Model S’s that one buyer, in a staged event probably mandated or encouraged by the Chinese government, smashed the windshield of his new Tesla when it finally arrived.


To (almost literally) give the Devil his due, the economic pressure the Orange One’s administration has been putting on China appears to be the reason why Tesla and other companies are now able to set up manufacturing there without having to become minority partners with a domestic Chinese company.

But that’s just today. The Chinese government can take that away as quickly as they granted it.

Agreed. At the end of the day it’s like dealing with a drug cartel, the profit potential is enormous but at some point you will find out that your business partners have a no holds barred attitude to doing business. This is a high risk investment in an era in which China is taking an increasingly hostile attitude towards its neighbors and the West.

While Trump started the trade war. Work had begun on trade TPP was an effort to curb China’s influence and working with WTO to eliminate developing country status for China is a better strategy.
China immediately made concessions agree to lower some tariffs and purchase more products. Instead of taking that as a win Trump increased demands. He doesn’t understand that supply chains require factories to be moved and built and that doesn’t happen overnight.
China also has more renewable energy patents than the US, or Europe.
I suspect no trade deal will happen until Trump is out of office.
Trump’s word in negotiations is worthless in the US and the world. Trade negotiations aren’t conducted over Twitter.

I think China politicians and population have a lot of respect for Musk.

also if they end up with being able to get the production cost down in China compared to the US, what will prevent them from stop exporting from the US to other countries (EU, Australia, Asia)

ev market = car market