After Tesla established its factory in China, can Sino-US trade talks usher in a turning point?

Can Tesla, which has tried repeatedly to build a factory in China, really succeed this time?

Recently, Tesla (Shanghai) Co., Ltd. business license brushed the entire network. According to industry and commerce information, Tesla recently established Tesla (Shanghai) Co., Ltd. in Shanghai, which is 100% owned by Tesla Motors Hong Kong Co., Ltd.

After experiencing multiple jumps, the Internet of business licenses made Tesla's road to China's construction more credible. Tesla's goal of setting up factories in China seems to be only one step away.

Is this really true?

It can be seen from the registration information of Tesla (Shanghai) Co., Ltd. that it was approved by Shanghai Pudong New Area Market Supervision Bureau on May 10, with a registered capital of RMB 100 million. The main business scope is: electric vehicles and parts technology development, service, consulting, and transfer in the field of power batteries, energy storage equipment and photovoltaic products; commission agents (except auctions), wholesale, and import and export businesses of the above-mentioned similar products, and provide related supporting services for this; Automobile display and related product promotion.

A careful analysis of the business scope of the registered company shows that Tesla (Shanghai) Co., Ltd. does not cover the manufacturing business of electric vehicles, and setting up a company and establishing a factory in China is not a concept at all.

Accidents frequently occur in mass production

What is embarrassing is that many media and self-medias have simultaneously published the news that Tesla has invested and built factories in China at the same time. Is Tesla's release of information in China a blind eye or a suspicion?

First of all, let's take a look at the situation that Tesla is facing when she releases the news, and she can clearly understand the reasons behind her choice.

Since the beginning of this year, Tesla has suffered from the fire of its electric car. The most recent accident occurred in Florida last week. The accident in Tesla directly took the lives of two young high school graduates.

The accident was less than two months after the Tesla MODELX had a car accident in Mountain View, and its negative news on driving safety never stopped.

On April 22, 2018, a ModelX in Florida ran into two walls and rushed into the gym. Fortunately, no one was injured. The driver said that he had been braking on the brakes, but the Tesla was accelerating.

On March 24, 2018, a Tesla ModelX exploded after a traffic accident in Mountain View, California, USA. A Chinese driver died after being rescued.

On March 4, 2018, Tesla's Shanghai Jinqiao Super Charging Station, a Tesla ModelS charging fire accident, caused two Tesla ModelS to be damaged.

On January 22, 2018, at the Los Angeles 405 Freeway, a Tesla ModelS lost control and crashed into a fire truck parked on the side of the road. Fortunately, there were no casualties.

On January 12, 2018, a self-driving Tesla Model3 lost control as it turned, causing the vehicle to vacate and then leap into the stream.

In January 2018, an underground garage in a residential area in Chongqing, a Tesla ModelS spontaneously ignited without being charged or collided.

In a short period of time, accidents frequently occurred, causing public doubts about the safety of Tesla electric vehicles, and at the same time making their ups and downs financial situation worse.

According to real-time market statistics of US stocks, Tesla's share price fell 2.67% on Wednesday. At present, Tesla's share price has fallen for five consecutive trading days. As stock prices continue to fall, Tesla's market value has shrunk significantly, and its market value has fallen to $48.25 billion at the price at the close of US stocks on Wednesday.

On the other hand, Tesla is also in trouble in the manufacturing process. The challenges encountered in the Model3 production ramp reflect the fundamental problems encountered in the design, production process and automation level of the car, which may put pressure on the profitability of the car. .

These have directly affected the expectations and evaluations of Tesla by investors and consumers. Adam Jonas, a Morgan Stanley analyst who has always been optimistic about Tesla, also recently lowered the target price of Tesla, down from $376 to $291. The range was 23%, a 16-month low.

Is it a blind eye or a suspicion?

In this context, Tesla can really play fewer cards, and Musk put the key to solving problems in China.

The direct production of Tesla in China has always been the target of Musk. In April this year, the National Development and Reform Commission released the news that China will cancel the restrictions on foreign-funded shares of special-purpose vehicles and new energy vehicles in 2018, and it will also prompt Mask to speed up. Promote the catalyst for building factories in China.

At Tesla’s Q1 earnings conference this year, Musk took the initiative to mention “we will announce the address of China’s super factory soon”, and according to Musk, the exact information about Tesla’s establishment in China will not be late in the fourth quarter of this year.

However, building a factory in China is far from as simple as it is supposed to be, because in accordance with China's relevant policies, China has gradually eliminated the restrictions on foreign-invested shares in the auto industry in stages, while foreign companies still need to comply with the relevant investment management policies as required. For example, after the release of foreign stocks, foreign-invested new energy vehicles in China can only pass through existing fuel vehicle joint ventures, or apply for new pure electric vehicle companies, or acquire other pure electric vehicle companies. As a result, Tesla’s plan to establish a wholly-owned factory in China in the short term can only be grounded.

Statistics show that the Chinese market accounts for 20% of Tesla's global sales. China’s construction of the factory has been delayed, and the process of expanding the Chinese market cannot be delayed. It can be seen that the establishment of Tesla (Shanghai) Co., Ltd. may be the initial layout of Tesla's marketing and research and development before the establishment of the factory in China.

Whether it is possible to build a factory in China depends on Trump’s trade policy with China.

It is worth noting that since Trump’s trade war with China, the US’s extortion scheme has not succeeded. After Trump’s special economic and trade negotiation mission hit the wall in China, the reciprocal negotiations between the two sides have just begun.

Unlike the US's overall contraction to trade protectionism, China is actively expanding its pace of opening up. Since the Hainan Boao Forum, the automotive industry has been regarded as the frontier of China's open pilots, especially the relaxation of foreign-invested stocks in the auto industry and the reduction of automobile import tariffs. These two steps are for the foreign auto giants to enter the Chinese market great opportunity.

China is willing to open its market to countries that are willing to cooperate in good faith. If the United States continues to engage in trade war confrontation, the vast Chinese auto market may not have the opportunity for American auto companies to get their hands on, and will only good for Germany and Japan, which are also auto powerhouses.

In the future, whether Tesla can invest and build factories in China depends to a large extent on Trump's sincerity in China's trade policy. The good news is that in the matter of sanctioning "ZTE", Trump has expressed an attitude that is willing to resolve properly. As the Chinese delegation visited the United States, more in-depth and meticulous negotiations have just begun, and Sino-US trade disputes are developing in a good situation.

It can be seen that only China and the United States can reach a mutually acceptable compromise on trade policy, and Tesla’s road to building a factory in China can finally be settled.

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