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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 (1378)
CNBC (3 months ago)
Does Tesla have a chance in China with so much local competition? Let us know what you think below:
Paul Sucker (12 days ago)
And in a few years Tesla will have to compete with their own designs, manufactured and sold by other companies at say half the price.
thsu1 (19 days ago)
Alex F because CNBC stands for Chinese National Business Channel.
rhythmmaster (20 days ago)
+Alex F Americans don't give a damn about Taiwan, they don't know where Taiwan is, don't embarrass yourself
Diego Meza (29 days ago)
+Bogusgal u dont get the joke
Bogusgal (29 days ago)
+S H And the Chinese are watching Netflix like crazy, right? lol!
Erick S (8 hours ago)
There goes Tesla's IP to China that the US taxpayer paid for.
rezaoktovian (19 hours ago)
good choice time to move the business to china
Rata 4U (1 day ago)
Tesla stocks are at $190 - fell from $370. They say it's going into junk territory and Tesla is finished. I dunno.....it's a huge gamble.
E J (1 day ago)
Are those Chinese electric vehicle numbers including hybrids?
Johnny Stewart (1 day ago)
Great for China!!
Mile Topic (1 day ago)
Elon come to Serbia and invest. Serbia can export cars to Russia and China without taxes.
Paulo Alexandre (1 day ago)
So you're telling me that China is hurting Tesla but not cutting them some slack? Performance Model S costs over 100k USD literally everywhere outside the US. Model S being expensive is not a Chinese exclusive phenomenon, but this video paints China in a very bad light because they really want Tesla to do good over there. Meanwhile they cost 112k USD in Portugal and no one really cares lol.
Oboy Phan (1 day ago)
When state dont creat works???
Oboy Phan (1 day ago)
Oboy Phan (1 day ago)
U dont need world???
Oboy Phan (1 day ago)
Business is money!!!we only think about money!!!!!
gino enas (2 days ago)
No Chinese made car will be in direct competition with Tesla, simply because they just don't stand up to Tesla refinement and sophisticated engineering. Watch The German cars take a nose dive as soon as Tesla production will become robust.
Surplus King (2 days ago)
Tesla needs china means finally Huawei would win the trade war
Juan Gómez Fuentes (3 days ago)
So essentially China is producing so many electric car because they are subsidise and put extremely high taxes to imports. Why have we been importing from China for next to nothing all these years?.
Hammer Home (3 days ago)
If a Tesla sells for $10K in China ? you can bet they will be exporting them back to America at the CURRENT prices ... only to exponentially increase their margins. More raping of American consumers...
Myles Clark (3 days ago)
To be honest, none of the cars shown have any appeal to me. Put all the technology and LED lights you want on it, the raw driving experience is what makes me smile.
samtoo2010 (3 days ago)
The only problem is that in general , Chinese citizens don’t make that much money that can afford a 30000 dollar car
Alex ander (3 days ago)
because made in china is way better than made in us , quite simple
-Can Ameri- (14 hours ago)
LennyThroughParadise (3 days ago)
Tesla is globally gonna have a great outlook on the long-term, partially like was said in the video: Musk and his team are fully behind why they do this. Not for the money, a real idealistic vision that strives much farther than that.
Arsyad Idris (3 days ago)
The challenges faced by tesla was the same problem faced by toyota n honda during the late 80s to mid 90s. The american gov heavily taxed imported japanese cars so the japs simply opened factories in the states
David Wratten (4 days ago)
China is a totalitarian state, one only has property/ human rights if the state allows that right !!!! Think back to Tibet. Tiawon will be next.
Nattaphon J (4 days ago)
So shame on tesla. Too much greedy to make money on China in exchange to give Technology transfers to china. Now, it’s a trade war. Tesla would be ban in china. Just like U.S. ban Huawei. Headed to bankruptcy
Yi Yang (4 days ago)
You wanna know why there is so many EV cars sold in China? Because we care about environment very much unlike what they said in Fox news. In my city all 10000 cabs and 3000 buses are Electric powered and there are 20 cities like ours in China
deadbutmoving (4 days ago)
With Trump's trade war, Tesla will feel retribution from the Chinese Government.
Dynasty GDE (5 days ago)
so why American government doesn't give those opportunities to European car manufacturers so European car manufacturers can do the same in America help them build their car here!
돈돈센세どんどん先生 (5 days ago)
테슬라와 같은 전기차 시대가 곧 도래할거 같네요
Abdenacer Fodil (5 days ago)
In short . Tesla : _ quality. _ elon musk . _ the brand name . _ full dependent .
António Ramos (7 days ago)
Tesla has no competition !!
Amalgamated Potato Packing Pocatello (7 days ago)
CNBC is ignoring so many crucial aspects of TESLA. Really makes me wonder who OWNS them. Who butters their bread? The mule brains forget Los Angeles and Denver had the air quality of Beijing in the 60s...before the catalytic converter were forced into cars in the early 1970s. Government regulations made those places breathable. China understands more than the USA about climate destabilizing and the potential catastrophe for the new cities of the coast. CNBC, brownosers for OIL. UNBELIEVABLE
astro ayumi (8 days ago)
Tesla definitely will succeed in China bec.Chinese govt. take care those big companies want to do business in China,unliked US unfriendly treatment to huawei doing business in US, the worst thing is they are blinded with jealous accusing huawei without any solid evidence , US always use force, sanction,regime change tactics to make bullying to other sovereign nation, hopeness for an evil declining power !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
nadamasdisponible (8 days ago)
great idea. 2019 TESLA factory opens in Shanghai. 2020 TEFLA factory opens across the street
sweiland75 (8 days ago)
Tesla needs to focus on India.
Kim Wetteland (12 days ago)
Well good luck with that with the ongoing escalating trade war.
Alien Nations (14 days ago)
China gonna steal your tech tesla - beware ! China's government are CROOKS and forced organ harvesters of prisoners ! So you think they care about IP theft! China is dirty word in the business world, worst of the worst...
Fra Tre (16 days ago)
Fra Tre (16 days ago)
Fra Tre (16 days ago)
Fra Tre (16 days ago)
Market Merchandise (16 days ago)
CNBC is full of SHORTS . Their main purpose is to take down Tesla. Full of HIT PIECES from their websites to their live TV shows. They are just oil SHRILLS
Andras Libal (16 days ago)
Hopefully VW Audi and Porsche will get the electric part of their vehicles up to the level everything else is (design, interior quality, body work, precision etc) and outcompete Tesla in the electric segment as well.
James Zeallor (11 days ago)
Isn't the electric part that needs innovation the graphene battery for charging and torque?
Thu Trâm (17 days ago)
China has 1.4 billions people compare to 300 something millions people in U.S. so of course China's workforce is stronger and they can produce higher amount of goods than any other countries.
johnny lara (19 days ago)
Tesla is going to boom once this gigafacgory gets going. Oh my.
alandinhio10 (19 days ago)
That is one of the only things i agree with trump. They tax american products so much they force companies to build there.
AttilatheThrilla (19 days ago)
The first thing that popped in my head... Slave labour.. 😳😳
guillermo estrada (19 days ago)
The Chinese are going to copy Tesla technology for them self.
Jing Li (19 days ago)
Eventually, a good China map
franki3Ru550 (19 days ago)
North America wake up!! gas needs to go.. people are still comfortable with gas cars here lol
rhythmmaster (20 days ago)
as a Chinese, i have one question, why don't we ban Tesla and arrest Elon Musk 's daughter ?
sunnydays DDT (19 days ago)
I thought he's single.
rhythmmaster (20 days ago)
USA banned huawei and arrest their CEO's daughter, meanwhile Tesla set up Gigafactory in Shanghai, how ironic
Leif Johnson (20 days ago)
More shade being thrown at Tesla by CNBC - just like the other fudsters.
James Formica (20 days ago)
Leif Johnson I read that there and lead me for more information.
V H (20 days ago)
The chinese can build there own version of the tesla cars at a much lower cost, anyway tesla build quality is very American lol, the Japanese got it right years ago with the hybrid cars....
Youtube Employee (20 days ago)
V H there will be a Tesla gigabyte so they also would benefit from lower labor costs and exemption from tariffs
Prince Jadon (21 days ago)
Nio is very advance than American own
Pitate (21 days ago)
That’s how China steals technology by hosting companies manufacturers in their country.
Viagra Falls (21 days ago)
I wouldn’t be surprised if one day Elon Musk becomes the world’s first Iron Man
sivan savanna (22 days ago)
Meilleure partenariat du monde les batteries tesla durent 20 a 30 ans...un bon deal pour elon Musk...
Nordav Devito (22 days ago)
Their country is already polluted with smogs. They should be running only electric car now.
Uzi Panti (22 days ago)
Rich chinese always gravitate to foreign luxury brand. Always. Theyre buying Neo and BYD coz Tesla isnt established there yet. But when they do, Tesla will boom there
Wasif Anowar (22 days ago)
I doubt they won't succeed
Jeetu Sonawane (23 days ago)
I am surprised as to how Tesla - the worlds largest electric car maker has not entered Indian market..untapped huge car market..makes no business sense...
wornohaulus (23 days ago)
Nobody comes to our country unless there is tax incentive.. we need to make the cars for ourselves.. bikes ourselves.. otherwise we would all still be riding 1980 rebadged marutis.. the fact the cost and infrastructure is ridiculously lacking in India.. that's a huge pain point.. can't keep waiting.. we gotta build our own destiny..
Michigan USA/Singapore S.E.Asia (23 days ago)
Slave labor
Jorge millenia (23 days ago)
Tesla is more luxury And Reliable So I said yes the have potential Of surviving in competition here in China 🇨🇳
pahvalrehljkov (23 days ago)
im hoping for new models, like sport and luxury with opening new factory...
Nick Fallon Photography (24 days ago)
Chinese love their iPhones, and Tesla is the iPhone of the car industry! They are gonna love it, whatever the price. Status symbols are a huge thing in China, and the other EVs are frankly FUGLY! By the way an ICE factory is not the same as EV factory.
Shane Crawford (24 days ago)
Tesla will go the way of betamax!
Andrew Youssef (26 days ago)
Considering The current population of China is 1,419,175,193, i think Tesla Model 3 EV's will have a huge success in China.
Mihail G (26 days ago)
That’s good that they have competition, Elon mask was boring now he has a competition on luxury durability and financial prices:) LOL
Pitimino * (28 days ago)
he hosted meme review, now he will host china
creator generator (28 days ago)
Somewhat FUD title but surprisingly fair presentation. 1. China HAS to go BEV, big on solar PV & wind turbines in order to leapfrog over what the west screwed up by building on fossil fuel power base. They may still use coal, but my guess is only because they have to, for now. 2. If China respects their set up with Tesla and allows FAIR competition (which is amazing in itself), then I expect they will be an influential production powerhouse in the next few years, putting the U.S. (with it's crony capitalism for big-corp shown by overt support for fossil fuels & its climate change denial), to shame. (Other G20 countries also suffer the same disease.)
Aurobindo Ghosh (29 days ago)
is tesla giving china modern technology? are dragon spacecrafts made in china?
babiumno1 (29 days ago)
Who cares? Just wait for it to be up and running and then form your judgement.
harry camper (29 days ago)
FUD from fudwits cnbc
Bogusgal (29 days ago)
I don't like the name "TESLA."
端木赐 (29 days ago)
HUAWEI i know it's you😁,take off your colorful cover
Aon Lazio (29 days ago)
Next target: Russia, but remember, in russia, you do not buy EV, EV buys you.
FRANKLIN Z (1 month ago)
Comment from China Yes, there are many EV companies and they make a lot of cars. However, their batteries are TERRIBLE, and would likely to be reduced to 50% or less under 5 years. If Tesla can start producing local model3s by them, many people will switch to Tesla.
Honk Honk (2 days ago)
EVs in China are made for the sake of cheapness alot of the time
Johnnie Sohn (1 month ago)
Personally I think the two companies should merge... Instead of a pissing match they could learn from each other share resources collaborate and become a super company together. They both share similar interests so they both could change the world together... I think many companies should do this globally IMHO... Unfortunately everyone has their own agendas and will only get in their own ways lol...Imagine though if all the best of the best companies merged how far we would and could be!!!
Debts&Defecations (1 month ago)
Of course Mercedes, Audi, bmw, Toyota will take over the ev market. Tesla as a company is nothing but a government experiment
Ryan Jackson (1 month ago)
I'm very curious as to why Tesla is being given the red carpet treatment my the Chinese government. They don't have to have a local partner to do business, and the Chinese government is outright asking them to sell their product there. I think it's likely they're hoping to steal some of Tesla's technology- which is likely considering that it's a common practice there, and Tesla has the most advanced electric vehicles in the world.
Harry M20 E30 (1 month ago)
And Selfish Donald Trump hates it when manufacturers are setting factories in China
Dan Man (1 month ago)
I wonder if Tesla sales will suffer if tension between US & China becomes too strong
Mo City Beau (1 month ago)
Why you cant make it affordable here? I hope China steals your factory
Grosz Marton Csaba (1 month ago)
hm china ,china...will buy tesla but many people chinez company will go bankrupt by tesla so they will try to destroy tesla
Peter J!ang Wang (1 month ago)
Your map is bloody wrong, Taiwan is not a part of China.
Louis Wu (1 month ago)
Do it by your strength not your mouth.
I HATE CABBAGE (1 month ago)
Ironically, we who advocate electric motor are the one that killed the electric car industry, we could have been the leader in electric motor 😭😭😭😭
X. Samurai (1 month ago)
Who wanna buy an electric car made in China? I honestly don't.
BSPBuilder (1 month ago)
Apparently China sold ~1.2 millions EV last year. At least 1.2 million people bought made in China EVs.
Ryan VanGelder (1 month ago)
Wow, that Xiaopeng G3 is a big copycat from the model X
Jason Yang (1 month ago)
The Chinese government is reducing subsidies for new energy vehicles, which is good news for Tesla.
ggrey3155 (1 month ago)
Years ago when Elon Musk announced his grand plans for electric vehicles, I knew already he was in the wrong country! He may have praised America's political system, but money speaks louder than words. It is telling that my predictions have proven correct: it is China, not the US, where Tesla's future lies. There are several reasons. First, China's people are getting rich and buying cars for the first time. They have no experience with conventionally powered vehicles that use internal combustion engines. They might as well jump to the latest technology, where it is clear that non-fossil fuel vehicles will be the future. Secondly, there is government support for renewable energy and electric vehicles that is sorely missing in the US! Look at how China has won the race (hands down!) for dominating solar panels and wind mills. China's government knows exactly where it wants to go, and it will use the government's will to get there. Bottom line: China has not been infected with the anti-government nonsense that permeates US politics. Chinese people believe in their government!!! China's people believe government has an important role to play in formulating the national strategy, setting the national agenda, managing the economy, building public infrastrcture, and investing in science and technology. Americans have a fetish with free market absolutism and absolutist individualism. Chinese still believe in society and its well being. Thus, when climate change threatens China's coastal cities, and desertification of its farmlands, China's government will act, with full support from its people. Thirdly, Chinese believe in science!! China has not been infected by a Christian cult that causes people to put faith in unproveable nonsense while rejecting proven science. China does not question that anthropological climate change is real, and that China has to do something about it to help itself. For these reasons, China will win the "race" to renewable energy and electric vehicles, because it isn't really a "race" - the US is barely even taking part. As for Elon Musk, the giga-factory in Shanghai is impressive! It is almost one square kilometer in area, and I read that construction workers are working three shifts 24/7 to get it built. Elon Musk should just see which side his bread is buttered and take up Chinese citizenship. China actually appreciates intelligent people like Elon Musk, unlike people in a certain political party in the US. I will not rule out that China's Communist Party might want a person of Elon's caliber to advice them on science/technology matters.
SlimPeas23 (1 month ago)
Ev cars have bad range for miles I live in ga I would have to charge all most twice to get out of my state lol
chiang Galen (1 month ago)
i dont think tesla have the advantage to compare with its competitors in china. because china market more players. those local players repose much fast than Tesla. and china have a very strong local supply chains. Chinese players will beat tesla as the same way to beat iphone and sumsung
BABY JACKLI (1 month ago)
electric car sucks!!
Jonathan Pusar (1 month ago)
Tesla should take advantage of this opportunity into China and Asia and create a new low-cost Tesla micro car model in addition to the Model S for China's elite. The prestige of the brand alone will sell a bunch. Plus domestic Chinese brands struggle internally against competition because the perception in China for their own vehicles is very negative despite improvements. A lower range small model at around 15-20k would be a huge seller for the growing middle class, especially those whom purchased older Chinese vehicles looking for an upgrade.
Tony Ruiz (1 month ago)
You mention all of this competition but what you fail to mention is the biggest limitation of all of these "competing" cars. No one has come up with a car that can travel over 300 miles in a single charge like the Tesla model 3 Long Range. Until someone comes up with a car with similar specs, I think it will be hands down Tesla's market for the taking.
sas 37 (1 month ago)
Why dont they Invest in India.You r welcomed.
Bryan Breezy (1 month ago)
jaden smith made tesla cool
Saravuth Seng (1 month ago)
Chinese want to get their hands on Tesla R&D
George Simon (1 month ago)
The biggest cost in an EV are the batteries. No one, not even the Chinese makes them better. They are far superior than anything else out there. Which translate into more consistent range under a variety of conditions. That is the primary reason why Tesla has outsold GM, Volkswagen, Nissan and anyone else in the West by such a huge margin. China is no exception. Sure, you can buy a cheaper model from a Chinese company. Do they have the same advanced safety features ? The best batteries in the world ? The superior electric motor ? The best autopilot in the industry ? Leading edge design ? I doubt it. Not to mention the status symbol. The Model 3 will sell. Even if it costs more. If only Tesla can build them fast enough.
Jaghori (1 month ago)
How about Volvo Polestar?
Rohit Kr (1 month ago)
To summarize the video : Elon and Tesla can succeed in China, but they may not succeed in China. But then again, they may succeed in China
deejee (1 month ago)
just give them 2 years, Tesla competitors will have teslas technology and make it cheap as chips. China 1 world -1
BSPBuilder (1 month ago)
+deejee Still do not know Tesla's competitive edge? LOL.
deejee (1 month ago)
+BSPBuilder stop dreaming
BSPBuilder (1 month ago)
You really do not know Tesla's core competitive edge, do you? Plus USA != world.