Tesla's China Dream Threatened by Standoff Over Shanghai Factory
Tesla Inc., the biggest-selling electric carmaker in the U.S., is in danger of being relegated to an expensive niche in China because Elon Musk can't clinch a deal to open a factory there.
From article, (Tesla Inc., the biggest-selling electric carmaker in the U.S., is in danger of being relegated to an expensive niche in China because Elon Musk can't clinch a deal to open a factory there.
More than seven months after Tesla said it was working with Shanghai's government to explore assembling cars, an agreement hasn't been finalized because the two sides disagree on the ownership structure for a proposed factory, according to people with direct knowledge of the situation. China's central government says the plant must be a joint venture with local partners, while Tesla wants to own the factory completely, the people said, asking not to be identified because the negotiations are confidential. Currently, all foreign automakers must partner with Chinese companies in order to manufacture locally.
The disagreement doesn’t mean a deal won’t be reached in the future. Tesla currently sells cars in China, but an import tax of 25 percent catapults the sticker price beyond the means of most consumers. A Tesla Model X made in the U.S. and shipped to China costs about 835,000 yuan ($132,000), providing openings for cheaper models from domestic rivals such as BAIC Motor Corp., Warren Buffett-backed BYD Co. and startups NIO and Byton.
“I am very into Tesla for its battery technologies, but I can only afford a Tesla if its price falls below 300,000 yuan,” Li said. “It will take years before that happens, so I had to make do with a domestic EV.”
BYD's top seller—the e5—costs 129,900 yuan after subsidies from the central government, according to its website. NIO and Byton also beat Tesla on price. NIO's ES8, with a range of 355 kilometers (221 miles) on a single charge, sells for 448,000 yuan ($71,000).)
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From article, https://www.forbes.com/sites/chuckjones/2017/07/30/how-much-will-teslas-model-3-really-cost/#59eb02f67dcb
(the [Model 3 price] “options” are:
- Base car with a 220 mile range for $35,000
- Extended range of 310 miles for $44,000
- Add Enhanced Autopilot feature for $49,000 (40% higher than the base price)
- Add “Full self-driving capability” for a total of $52,000 (49% higher)
Me, "This got me thinking. How much would a basic Model 3 cost in China?
If we take the Model 3 base price of $35,000 dollars and add 25 percent Chinese import tax you get a Model 3 selling price in China of $43,750. Well, within 300,000 yuan at 277,672 yuan that Li would want to spend. If you take into consideration that there are a bunch of Lis (Chinese) out there, willing to spend money, the Model 3 has sale value in China. Obviously, building the Model 3 in China would get rid of the 25 percent import tax which hits the base Model 3 at $8,750.
But, now, you have to take into consideration the new Subsidies that China wants to add to Electric cars to spur their use."
From article, https://www.bloombergquint.com/technology/2018/02/13/china-raises-subsidies-to-reward-longer-traveling-electric-cars
(The central government incentive for electric cars that have a range of 400 kilometers (249 miles) and beyond on a single charge has been raised to 50,000 yuan ($7,900) from 44,000 yuan, the finance ministry said in a statement dated Tuesday. At the same time, vehicles have to be able to go at least 150 kilometers on a single charge to be eligible for incentives, up from 100 kilometers previously.)
Me, "If you include a subsidy of 7,000 let's say, knock off a few hundred dollars because the base Model 3 has a 220 mile range, (not 249 miles.) You get a final base price of $36,750, (233,363 yuan in China). Even though Tesla is hit with a 25 percent import tax the new chinese subsidies reduce this affect. Sure, domestic chinese car companies will be lower in sale price, because they don't have to worry about import tax, but Tesla has its name brand going for it. We don't know if Li is middle class, but he likes Tesla. He just wants a Tesla that is cheaper. I think the Model 3 fits his and other chinese desires.
It is not absurd for Tesla to be creating a huge supercharger network in China.
Even without the new subsidies, a Model 3 can be competitive in China.
Let's look at RORO's ships to get a sense as to how the Japanese have been importing Cars into the U.S. They must have done it cheaply and in mass to generate huge incomes on cars and trucks."
From Wikipedia, https://en.wikipedia.org/wiki/Roll-on/roll-off
(Roll-on/roll-off (RORO or ro-ro) ships are vessels designed to carry wheeled cargo, such as cars, trucks, semi-trailer trucks, trailers, and railroad cars, that are driven on and off the ship on their own wheels or using a platform vehicle, such as a self-propelled modular transporter. This is in contrast to lift-on/lift-off (LoLo) vessels, which use a crane to load and unload cargo.
During the 1970s, the market for exporting and importing cars has increased dramatically and the number and type of ROROs has increased also. In 1970 Japan’s K Line built the "Toyota Maru No. 10", Japan's first pure car carrier, and in 1973 built the European Highway, the largest pure car carrier (PCC) at that time, which carried 4,200 automobiles.
Today’s pure car carriers and their close cousins, the pure car/truck carrier (PCTC), are distinctive ships with a box-like superstructure running the entire length and breadth of the hull, fully enclosing the cargo. They typically have a stern ramp and a side ramp for dual loading of thousands of vehicles (such as cars, trucks, heavy machineries, tracked units, Mafi trailers, and loose statics), and extensive automatic fire control systems.
The PCTC has liftable decks to increase vertical clearance, as well as heavier decks for "high-and-heavy" cargo. A 6,500-unit car ship, with 12 decks, can have three decks which can take cargo up to 150 short tons (136 t; 134 long tons) with liftable panels to increase clearance from 1.7 to 6.7 m (5 ft 7 in to 22 ft 0 in) on some decks. Lifting decks to accommodate higher cargo reduces the total capacity.
These kinds of vessels perform a usual speed of 16 knots at eco-speed, while at full speed can achieve more than 19 knots.
With the building of Wallenius Wilhelmsen Logistics's 8,000-CEU car carrier Faust out of Stockholm in June 2007 car carriers entered a new era of the large car and truck carrier (LCTC).[20] Currently, the largest are Wilh. Wilhelmsen's "Mark V" ships, led by MV Tønsberg.
The car carrier Auriga Leader, belonging to Nippon Yusen Kaisha, built in 2008 with a capacity of 6,200 cars, is the world's first partially solar powered ship.[21])
Me, "Even if you take on shipping expenses, the Japanese shipped 1.5 million cars into the U.S. in 2016, that works out to 4,110 a day. A single RORO ship can carry almost double that!! Making it a cheap form of delivery in mass to China or around the world.
Someone at Tesla must look at these numbers."
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