Elon Musk Meets Vice Premier As China Takes Tesla Seriously

Tesla CEO Elon Musk’s surprise meeting with a top Chinese official indicates the electric automaker has big plans in store for that country.

Late Tuesday, China’s official news agency posted a tweet with a photo of Musk meeting Chinese vice premier Wang Yang in a formal setting.

The government is taking Tesla seriously. It’s the first time Wang has ever met an automaker CEO alone, according to Li Anding, a former automotive reporter for China’s Xinhua news service who now consults with automakers on doing business in China.

“Wang usually meets with groups of people,” Li said.

The meeting shown on the Twitter post (same photo pictured at top) sends a message that the government is crediting Tesla more than most. Li also thinks Tesla is serving as a good example to consumers worried about long charging times and a bad driving experience in an electric vehicle, he said.

Li predicts that the meeting is a clear sign Tesla is in talks with the government about forming a joint venture to locally produce cars. That would remove the steep 25-percent tariff Tesla currently pays on its imported cars to that market.

Joint ventures are the norm in China these days with majors like General Motors, Ford, Volkswagen, BMW, and others having set up these relationships several years ago.

SEE ALSO:  Model 3 Orders in China Make It Tesla’s Second-Largest Market

A Chinese joint venture would reduce the price of a Tesla model and make it more competitive. It would also be a way for the U.S. automaker to meet its years-long goal of finding land and setting up vehicle production plants in China to reduce costs.

The electric carmaker is looking for partners. A high-level official from China’s auto lobby told Fortune Tesla is in the middle off holding meetings with potential partners in Chinese cities. Musk’s meeting with Wang, who previously headed the Guandong province, is bringing up speculation that the province is a potential site for Tesla to set up shop.

China is a vital market for Tesla, as Musk has said in the past. The company earned $1 billion in revenue there last year, compared to $4.2 billion in the U.S. For that revenue to grow profitably in China, Tesla will need to be well positioned for making and delivering its electric vehicles.

Competition is coming from luxury makers, such as the BMW Brilliance alliance, which allows the German automaker to sell luxury vehicles in that market. Then there’s BYD, the largest EV maker in the China and globally. As the Tesla Model 3 rolls out, Tesla will be well positioned to go after BYD’s customers.

Fortune

 

 


More Hybrid News...