Tesla Motors wants an easier way to build its vehicles in China, and is hoping the Obama administration can help.
Under current laws, China only allows foreign auto companies to build vehicles within the country if they are first paired with a Chinese partner. This adds to the cost and complications for carmakers that aren’t based in China. It’s also unfair, Tesla said, because Chinese carmakers can sell in the U.S. without this restriction.
“The China-owned companies are not expected to sell controlling stakes to American companies and are free from other trade hurdles that we face,” said Tesla spokesman Ricardo Reyes.
“The requirement that Tesla establish a joint venture for local manufacturing and other obstacles to our activities, such as much higher import duties in China compared to the United States, put American car companies at a significant disadvantage,” he added.
Tesla wants the Obama administration to address the issue during Chinese president Xi Jinping’s visit to the U.S. next month.
Other major auto companies, such as General Motors and Ford Motor Co., have chosen to form partnerships with Chinese companies instead of fighting over this requirement.
But Tesla, which is well known for questioning automotive traditions, is already laboring through significant challenges to sell its Model S in China. Adding to this is a tighter profit margin, due in part to the import fees that Tesla absorbs to keep the purchase price of its electric car low. By building a factory within the country, Tesla could lower its costs and hopefully take advantage of China’s growing electrified vehicle segment.
Tesla has begun preliminary steps for a factory in China, which CEO Elon Musk said could open within the next three years. Earlier this year, Tesla representatives spoke with Lifan Group and Chang’an Automobile Group – two Chongqing-based auto manufacturers – about the possibility of forming a new partnership.