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Why Tesla And Elon Musk Face Challenges In China

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Tesla recently broke ground on Gigafactory 3 in Shanghai and has grand ambitions in China but it faces serious competition there from a mix of Chinese and foreign automakers already manufacturing electric vehicles there, for example: BYD, BAIC Group, SAIC and Nio; and BMW, Mercedes, Audi and Toyota. Tesla needs China, the world's largest auto market, in order to succeed. Customer demand and government support for so-called "new energy vehicles" there is skyrocketing. CEO Elon Musk recently warned that without manufacturing in China, Tesla won't be able to produce 10,000 Model 3 electric sedans per week (as the company has aimed to do for years) and won't be able to offer the eagerly awaited base model at a price of $35,000. "Bottom line is we need the Shanghai factory to achieve that," Musk said on the company's 2018 fourth-quarter earnings call. However, Tesla — like other U.S. automakers — faces considerable competition in China. According to Michael Dunne, founder of automotive advisory firm ZoZoGo, "China produced half of global electric vehicles last year. The U.S. produced about twenty percent. China is clearly way out in front in terms of size, production and scale." Electric vehicle makers that are already up and running there include: - NIO, which went public in September 2018 - Warren Buffet-backed BYD - A partner of Volkswagen and GM called SAIC Motor - Geely Automotive Group which is the parent company of Volvo - BAIC Group, and its subsidiary, Beijing Electric Vehicle Co. A bevy of electric vehicle startups are on the rise in China too, including Byton and WM Motor Tech. Chinese automakers have benefited from some $60 billion worth of subsidies and incentives since 2012, designed to make new energy vehicles affordable for Chinese drivers, according to ZoZoGo. But as Musk recently bemoaned, Tesla hasn't been able to cash in on those subsidies and tax incentives. As a result, a Model S that would cost around $80,000 in the U.S. today would cost around $140,000 in China after taxes, for example. Tesla's vehicles will probably remain very costly in China until the company begins manufacturing at its planned factory there in Shanghai. Even though Tesla broke ground on its Gigafactory 3 in Shanghai, the company has yet to publish an 8-K filing with the SEC showing that it has secured funding, or secured a material partnership, to build it out. » Subscribe to CNBC: http://cnb.cx/SubscribeCNBC About CNBC: From 'Wall Street' to 'Main Street' to award winning original documentaries and Reality TV series, CNBC has you covered. Experience special sneak peeks of your favorite shows, exclusive video and more. Connect with CNBC News Online Get the latest news: http://www.cnbc.com/ Follow CNBC on LinkedIn: https://cnb.cx/LinkedInCNBC Follow CNBC News on Facebook: http://cnb.cx/LikeCNBC Follow CNBC News on Twitter: http://cnb.cx/FollowCNBC Follow CNBC News on Google+: http://cnb.cx/PlusCNBC Follow CNBC News on Instagram: http://cnb.cx/InstagramCNBC #CNBC #Tesla Tesla Needs China, But Faces Stiff Competition
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Text Comments (1290)
CNBC (1 month ago)
Does Tesla have a chance in China with so much local competition? Let us know what you think below:
Zhengzhao Mao (19 hours ago)
Kizz This keep burning fuel and poisoning the air
Amidat (2 days ago)
+Joey Gee Ummm - no the Chinese love German cars more than anything else. So really the German electric cars will be the biggest threat.
Anton (3 days ago)
Yes. Tesla makes the best car with volts in it
Enhbayr Bilegt (5 days ago)
+漢仔 boy. You don't be so toxic. You've overthinking it. :P
Caroline Liu (5 days ago)
+Alex F Because they are afraid of apologising on Chinese TV.
James Milovsky (35 minutes ago)
For TESLA,an E-car with a price lower than 60000 dollars should be really competitive …… Good luck TESLA……
mihai 123 (15 hours ago)
tesla doesn't need anyone,everyone needs a tesla
brian 5 (1 day ago)
China needs Tesla
BMW 2005-2010 (1 day ago)
china will copy Tesla
Brennen Cox (1 day ago)
Tesla will have to forfeit their technology/know-how to the communist party. GG Tesla.
Brennen Cox (1 day ago)
cities are ill equipped for electric vehicles.
姚果果 (1 day ago)
Not without Chinese Tesla or the most popular
Jobs Wong (1 day ago)
We China has 3 times bigger market than the US. thats the point. we have market. you have no choice.
MrRatclima (2 days ago)
Was always on the cards for Tesla, despite what they used to proclaim.
Dino Pappous (2 days ago)
Chinese EV's are affordable.....TESLAs are toys for ELITIST RICH......BIG DIFFERENCE....
Xinran Li (2 days ago)
Tesla doesn't worth the price, the interior made is not delicate and luxury compared with the traditional cars. PLus batteries do more contamination than gas when depositing improperly, and right now is the case
Amidat (2 days ago)
The German cars are who Tesla will have to "worry" about. China loves German cars from top to bottom. That said - of the local EV's - only a few will survive. That's how the auto world works. Quite honestly - I wouldn't be surprised if Tesla doesn't get bought
banana man (3 days ago)
Tesla will smash the competition
grimm reaper (3 days ago)
you can bad mouth and smear china all you want. china can outperform any country on price, quality, and speed.
Zuofei Wang (3 days ago)
Chinese auto market saved GM in last economic crisis. GM sold over a million per year of Buick in that difficult period. Tesla need Chinese auto market which is biggest on world.
Nima1212 (3 days ago)
Let China lead in Electric vehicles lol. If we decide to nuke them, they have more people, more electric cars and therefore more casualities.
demon feline (4 days ago)
Soon China will copy paint it a different color and claim they invented it .
AMIT GHUMATE (2 days ago)
For sure....
oldstone2002 (4 days ago)
The US corporations are playing right into China's hands
Alexander Kamambo (5 days ago)
bottom line is china is clever, because they know they have the biggest E.V market in the world and they have one of the highest population density in the world they know that already. There is money making opportunity here. Even thou Tesla might not be able to conquer the whole chinese market because of the already existing players. but definitely they are going to employee their locals and pay taxes which are not touched by anyone. i think they're pretty clever and business minded. unlike our african Zim president ED
Bob S (5 days ago)
China will invite them in, steal all their technology, then kick them out.
banana man (3 days ago)
Tesla shares all its patents on its technology anyway
C.M. Ho (5 days ago)
This is garbage compared to BYD cars.
Chee Hoe, Foo (6 days ago)
China is King
Robert G (6 days ago)
china and quality in the same sentence
bigart1993 (6 days ago)
2:57 I'm sure this feature has been used for some really inappropriate things.
Don DP (7 days ago)
tesla biggest problem is selling their all their car as "luxury vehicle". Maybe sell an "economy vehicle"
pistol shrimp (7 days ago)
These pro China's zealots kiss more ass than a toilet seat. There's nothing wrong with being proud of China, and hoping the best for them. But needing to stomp on Americans in order to do it is sign of weakness. Not strength.
Swimming fish Flying bird (7 days ago)
your logo like huawei
Shawn Eshwara (7 days ago)
Marketing in China is good but be careful
Zwbb Wei (2 days ago)
Why boss behind the curtain and manipulating USA doesn't need Tesla?
Duke (8 days ago)
You know damn well China is going to steal all the technology behind Tesla.
tcotiago (8 days ago)
Chinese are punishing on quality issues? Rofl
Luis Casillas (8 days ago)
So Tesla wants chinese government handouts. Thats why they can't compete. Because their competition gets the hand outs and they don't. Call me crazy but Tesla should also revise the poor quality of their cars before asking for handouts.
PeepersYeepers (8 days ago)
The only way Elon Musk can beat China is to make all Lamborghinis, Bugattis, Audis, Mclarens, and much more to be electrical China can't do that I bet...
Fuzzer 0804 (9 days ago)
To be honest, building a gigafactory in China is a win win, it'll create cars that China wants in it's market, help Tesla production, and help reduce carbon emissions from China.
Apple User 193 (9 days ago)
Buick needs to make electric vehicles in China.
Patrick D (8 days ago)
+Apple User 193 shhhhhh ;)~
Apple User 193 (8 days ago)
Patrick D Obama is that you!!!!
Patrick D (8 days ago)
Oh my god 😂😂
nun (9 days ago)
Tesla will have no problem with the mid to high end market. It's the most sort after EV and is more of sub culture than a product until the mystique wears off. They have to be weary of Chinese technology piracy though. China has been now built a world class tech sector by building other people's tech. Now we are looking to China for innovation.
timcheng18 (9 days ago)
Cover photo is wrong, Taiwan is not part of communist China.
Huqiao Shan (9 days ago)
From my experience in China, people love green energy source, last time I was in China I see electric bikes everywhere, and the Chinese people are becoming more and more environmentally conscious especially in recent years. But I am concerned with the pricing because at this price point Tesla is competing with luxury brands like Porsche.
Dan Kuo (9 days ago)
If Musk listened to naysayers and doubters, they wouldn't be the leading EV manufacture today. Challenges will make Tesla even stronger and increase their lead over the competition. Doubter never accomplished anything beside weighing down those that are making this world a better place for humanity.
DeepCupsChan119 (9 days ago)
Later Chinese people crash Tesla cars cause they don’t know how to drive
Lawrence Ding (10 days ago)
Currently there are roughly 250 million cars in China. Vast majority of those will be electric in 20 years even if the car market no longer grows. If Tesla could grab just 10% of that potential pie, that'd be more than 20 million vehicles. To give you an idea of that scale, Toyota makes about 3.5 million vehicle a year and it is the world's largest car producer by brand.
abraham mani (11 days ago)
But nobody want Chinese car and die in it ,its not crash worthy ,and look at flimsy and boxy Chinese car one hit you and your family is gone . Just like the other Chinese products no quality and no guaranty
karan kale (11 days ago)
Manufacture and sell in India, then you can become more profitable in a largely untapped market.
Wonderworld0000 (12 days ago)
I think Elon Musk knew what he is heading to. The culture of face saving from Chinese people is another key for Tesla. You own a Tesla, you should be from wealthy family or so. I don't think Tesla needs to reduce their costs to mid $10k because the Tesla owners won't be able to show off their class. Chinese people are getting richer (not all), they want to be recognized and they are willing to spend at least $40k for a so-called luxury car. Elon should make the EVs from 30k to $200k. I think he still gets what he wants. But 1 more thing: Elon, 80% some companies in China may want to "copy" your techs and ideas. Good tools - good person, helps others. But to wrong person... disaster...
Xiong Wang (12 days ago)
Tesla Auto is just like Apple iPhone. Elon will make big money at the beginning, but finally Tesla Auto will be replaced by BYD, just like iPhone be replaced by HUAWEI.
RSix_6 (15 days ago)
BMW Says that they are going to offer 14! Eletric vehicles... 14!
zhongwei hu (15 days ago)
I love Elon musk so much 😁
Rongsheng He (16 days ago)
But we don’t need them actually
Ace Miyamoto (16 days ago)
Tesla has a fair chance of winning the market,but i'm betting on NIO and german car manufacturers for the win...trade war had consequences ,most of the lads in china prefer german cars anyway,i'm not saying Tesla wil fail,it will conquer some market share but majority of the share will be taken by allready established ones.
Rocky Singh saab (16 days ago)
Arab countries future is bad Arab back Stone age
Chinese Joy (17 days ago)
EV is good, but can't wait for driverless vehicles to change our lives.
david pai (17 days ago)
Tesla has no chance
John Johnson (18 days ago)
Basically Trump pushed Tesla to China much sooner than expected
jim kuan (18 days ago)
Tesla made a strategic move to break into Chinese market at the height of the US China trade war. It gives China the negotiation weapon against US showing that China does allow car market to be accessed by US companies in full ownership. And it gives US the political spotlight that US can pressure China into admitting US companies with full ownership entering China. Tesla did not just enter China. It enters China with splash and with Chinese government support. WIN-WIN! Tesla played one of the best hands ever.
E Oanici (18 days ago)
So basically this trade war between the United States and China drove Elon Musk to create a factory in China?
LearnFaster (15 days ago)
China has always had high import tariffs.
TUO LI (18 days ago)
China needs tesla to give domestic manufactures some pressure. lack of competition is the major reason why chinese car companies are so far behind after so many years.
KILLA QUEEN BITE ZA DUSTO (18 days ago)
Its gonna be very hard for Elon and tesla to success now with the ecconomy growth rate of China slowing down and the gov getting more strick now, if they had this factory 2 years ago they may succeed much easier, but I personally really like Elon and his ideas like many other Chinese, so I hope he can success
Tianrun Li (18 days ago)
Every us company has trouble doing well in China.... what else is new
koyla empire (19 days ago)
China should not allow foreign business tycoon to take its local market, its not worth inviting such products in local market , peace
koyla empire (19 days ago)
China should look into the frauds of all US companies operating , Bcoz no foreign firm can be a fairy or an angel, all are corrupt and will be laundering money out of China , government should look seriously and bring them to face justice , two way traffic is better than one , operating now globally by US, bullying all globally but its corrupt business community is left out without facing charges in other countries...enough is enough, bring all corrupt US business person to face justice now in China, its now or never, US can't torture Chinese business person and enjoy freedom of its own corrupt business community abroad.....peace
Amine Williams (19 days ago)
Why wouldn’t the Chinese find a way to steal the mojo and sell cheaper version
Alex W. (9 days ago)
1st FYI: Elon Musk open sources all know-hows on reciprocal basis , so the Chinese do not have to steal 2nd FYI: Tesla in China is a wholly foreign owned company, so it does not have to partner with local company.
Cuong Nguyen (9 days ago)
+Yujia Lei Why should I be jealous if I don't even live in Vietnam or care about it, this old tactic is boring since you have no dispute on my argument. The very fact China has STATE Capitalist is nothing news. Seriously, all foreign companies eventually get replace by a Chinese version and China's government require to all foreign companies to share its tech to China and be compliance with China's rules at some point. Not to mention Chinese are racist as hell and even ask in job description as "Able to talk to Devil Head" aka White people.
Yujia Lei (9 days ago)
Cuong Nguyen oh I see some Viet is being jealous lmao you can talk to the president and beg him to send factory to Vietnam! Just offer a cheaper labor price like 5 US dollar per day, I believe tons of Vietnamese would rush into the office and want this job!
Cuong Nguyen (12 days ago)
Give it time, just like every other products, once they manufactures in China, you will see another Chinese company doing the same thing with full support of China's government and drive out the competitors.
John Law (19 days ago)
I like the last bit about the Chinese not forgiving on bad quality. Not too long ago China was known for bad quality and still is somewhat.
Igal Avraham Javdanfar (19 days ago)
I hate Elon Musk face and voice
rhinotiew1 (19 days ago)
Most China local brands like BYD targeted market are different from what Tesla was going after. It was just like people who bought Geely and Chery are not the same people who go for Mercedes. And unlike what this 诚橙程 (who is a fake BYD employee) who commented a couple of weeks ago, even if people are getting richer by the year, not everyone can afford luxury brands and not everyone are digging into luxury brands. However, China is a big market, and getting bigger by the years, so I believed that even if Tesla captured 1% of the market, the value was incredible.
Correct Opinion (19 days ago)
5:10 That is one of the ugliest cars I've ever seen.
NewsRedial (19 days ago)
2:34 who the hell is that lady in the studio looking at? So stupid the way the manufacture that one sided fake interview. Just talk to the camera. It's the viewers you are actually addressing.
Eli In the Wolverine State (19 days ago)
Lithium ion batteries are out dated. Very polluting. Super capicitors can be made cheap anywhere. Rare Earth magnets are very polluting.
Streamlined (20 days ago)
Tesla is the most hated company in America. It won’t be long before it’s hated in China too.
first Impression (20 days ago)
If EV chinese factories make righ now like 10 20 times more cars than Tesla, how come Tesla is worth so much more?
t l (20 days ago)
Porsche u say? I vunt vun! Porsche ftw!!
Anik Lal (21 days ago)
China is challenging for everyone one😎😎😎😎
Kim Mathis (21 days ago)
Cheap labor and no tariffs. Only a question of time when the Freemont plant is shut down…
Comment Highlighted (21 days ago)
Exciting time for Tesla... hope all goes according to plan 😬
Danny Steffen (21 days ago)
cheaper doesnt mean better.
Froggy Noddy (22 days ago)
china is screwing the US in ways no country has in a really long time.
Notmuch Tosay (22 days ago)
Technically really not much difference bw Tesla and other Chinese EVs, so Tesla has to work hard to improve their quality in order to compete in China market. I'm afraid the iPhone situation might repeat: after initial stage of popularity it is quickly squeezed by other Chinese brands because their quick quality improvement and price reduction. But the good part is that China is not going to play those dirty tricks like what US has been always doing to crash foreign companies when foreign brands are becoming more and more popular. Chinese usually do it in a positive way by improving themselves to catch up.
TIM apple (22 days ago)
I want NIO
Heavy Object (22 days ago)
Meh 140,000 dollars is’nt much for Chinese people I mean there is a lot of people on the street of China having a couple million in their pockets trust me in this
Plaid (23 days ago)
I think I've seen the mission of Tesla stated somewhere and if I understood it correctly this video is confirming the company's tremendous success
David Westwater (23 days ago)
Thats bulshit the chinese build bad cars even worse then us
Bushangels (23 days ago)
Just like any investment, companies will face just as many challenges in China as in America. In America, the company founder's daughter might be arrested because your American competitors have better lobbyists...
Igal Avraham Javdanfar (23 days ago)
Tesla sucks 🤮💩
Joshua Upham (23 days ago)
What China calls an electric car we call a golf cart in the United States. They wouldn't pass for the U.S market.
AceGhostification (23 days ago)
China say thanks for a new technology
trevor francis (24 days ago)
so everything is now made in china
reblo111 (24 days ago)
How many batteries does mercedes, audi and bmw make?
David Lee (24 days ago)
Tesla is the first ev, But not the last. A lot of strong competitors from China and Europe r just chasing up. Unfortunately no one has solved the battery problem yet. So it's hard to say which will dominate the market. Maybe the first whose ev can run 1000km once charged one hour.
Hunter Phung (24 days ago)
Tesla is a respectable brand in China. Chinese people love brand because it show up their status.
Purvesh Pandya (24 days ago)
What if you do local Chinese OEMS, so you will that tax benefits from china
the adm (26 days ago)
your like china
Bob Le (26 days ago)
If Tesla open company in China that will be so bad, no body want to buy any more, that way can help others company grow better in USA
Eric M (26 days ago)
Look at NIO at $6.10 3:54 ... Now it's at nearly $10.00 and rising
jman (26 days ago)
It's not just about the potential sales, it's about the unrestricted amount of data that can be gathered from the use of the vehicles. This will help them in other parts of the world where there are stricter data controls.
杜建安 (26 days ago)
I see more and more Tesla around me,I like Tesla too,But Its too expensive for me😢
Reynold Liao (27 days ago)
I've ridden in numerous Tesla before. Saying that it's "luxury" is a bit of a stretch. Even its top of the line model feel very pedestrian to me. I look forward to the German, Japanese and Chinese models. I don't think Tesla has a snowball's chance in hell once all the major automakers' EVs come online. RIP Tesla...
akshay shetty (27 days ago)
Guys buy NIO shares and hold for 10 years....it's just below 9$ and a potential multibagger...wish I could buy sitting from india
Mo Cuishle (27 days ago)
Chinese electric cars will be much better than tesla in the future.
Onenew Yen (27 days ago)
Just a reminder that Taiwan is not part of China, which mean the little island east to China should not be included in red region in the video thumbnail.
Parasite Lives Matter (27 days ago)
The rich Chinese don't want made-in-China crap. Hell, even the poor Chinese don't want the crap they manufacture themselves.