Tesla plans to have a fully operating plant in China
Over the past weekend, Tesla has finalized a deal to build a plant in Shanghai. According to "The Daily Rundown (Linkedin), "the groundbreaking arrangement would help Tesla slash production costs on cars it sells in the world’s biggest car (and electric car) market". Decreasing costs of production could be huge in the big picture for Tesla, whose cars are growing in popularity. Their popularity in China seems apparent as "China wants to sell 7 million electric vehicles a year by 2025, and all automakers already operating in China will have to produce electric cars by 2019, the nation announced last month." The new factory can help improve China's GDP per Capita and obviously decrease unemployment. I am curious to see how the production in China will compare to that in the United States; China has a large market and may prosper earlier than Tesla did in the U.S. Overall, both nations are sitting pretty after this major deal.
https://www.usatoday.com/story/money/cars/2017/10/22/report-tesla-reaches-deal-build-factory-china/788487001/
https://www.linkedin.com/pulse/affordable-housing-hard-find-retailpocalypse-wont-get-rundown/
I think this is a very smart move on Tesla's part. I think Tesla has a head start in the market and China could really be pushing Tesla cars being sold in order to meet the 7 million electric vehicles a year by 2025. In addition, decreasing the unemployment rate will help China out, and could cause some employees to switch to Tesla for loyalty. The only downfall I could see happening from this is once all operators in China switch to producing electric cars by 2019, Tesla will have a major increase in competition and could be in the bottom half of the pack if consumers are loyal to buying Chinese cars. I think it will be interesting to see how Tesla handles competition as well as how big of an impact they will have on China's economy.
ReplyDeleteDo you think Tesla will be able to compete with the lower-cost Chinese electric car manufacturers on the rise? I'm sure Tesla will be able to lower their production costs by exporting a factory to China not only by the lower costs for wages but also the closer proximity of their supply of lithium, but will the Chinese market be willing to pay their higher prices for a more luxurious car? This move is most likely partly driven by the recent tax breaks Asian countries such as China, Hong Kong and Singapore have offered to consumers for purchasing electric powered vehicles in effort to lower their emissions and fight pollution. These policies could just fill the gap between the price consumers are willing to pay and the price Tesla charges.
ReplyDeleteThis could have some impact on the production of Tesla's to be sold in the United States. I would not be surprised if Tesla is trying to outsource some of their production for U.S sales to China in order to cut costs and compete with other electric cars in terms of price. This could have a small negative effect on employment in the U.S, especially once Tesla grows.
ReplyDeleteI think this is a great move, and will be beneficial for consumers. Will lower production costs, more consumers will have access to this luxury product.
ReplyDeleteThis is a very interesting move for Tesla, however I'm not convinced that this move was made in an effort to boost the Chinese economy. China currently has an unemployment rate around 4% which is nothing that they should worry about. While the production of these luxurious cars will definitely boost an economy that already has high net exports, I don't think the majority of the Chinese population would be able to afford a Tesla. The cheapest model they manufacture to date starts at a base price of $36,000 USD, while the average Chinese worker makes the equivalent of about $4,000 a year. I'm very interested to see how the Chinese factory will decrease production cost and effectively lower the cost of the car, and maybe make the car more affordable.
ReplyDeleteIt makes sense that Tesla is opening this plant in Shanghai, considering China has a very high demand for electric cares. With China's goal to have all car plants to be producing electric cars by 2019, it makes sense that Tesla would want to have production in that company. It will be interesting to see if they are able to sell more cars in China than in the United States. Overall, I think it will be beneficial for Tesla, and opening the plant was a very smart move.
ReplyDeleteObviously expanding their brand to China and opening up a new plant in Shanghai will be good move on Tesla's part. We have cheap cars here in the United States but people still spend an absurd amount of money on the nicer, fancier, newer, faster cars, whether they are an actual better product or not.
DeleteAlthough i think this is a great move but i still don't think it will happen. The biggest cost savings manufacturing in China comes from reduced labor cost, which won’t be very important when Tesla manufacturing gets automated. But at the same time, I also wanted to see if they would be selling more cars overseas.
ReplyDeleteI do not think this is a big possibility in the near future. While it could happen at some point, and while there is a big demand in China for the electric cars, the labor costs would be very expensive. This would be very beneficial for Tesla in the long run if they are able to make it happen, but I do not see it happening in the near future due to the costs.
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