Tesla sets up shop in China
According to China's National Enterprise Credit Information System, Tesla established a wholly-owned subsidiary Tesla (Shanghai) Co., Ltd. in Shanghai on May 10. The subsidiary has a registered capital of 100 million yuan (NZ$22.7 million).
The business scope of Tesla in China involves technology development, import and export business, and does not involve vehicle manufacturing of electric vehicles.
The new company’s status as a wholly-owned subsidiary is a rarity in China. The registration comes after China announced it would relax rules that require foreign car manufacturers to go into business with local partners in order to make cars in China. The announcement looked set to most immediately benefit Tesla, as many other major car manufacturers already operate in China with local partners. Tesla CEO Elon Musk referenced the change in an earnings call earlier this month and expressed appreciation to the Chinese government.
The Chinese subsidiary has been long in the making but was held up over the partnership issue. Forgoing the partnership route, Tesla was instead selling its vehicles in China as imports, stamped with a whopping 25 per cent tariff, making them substantially more expensive than they are in the US and elsewhere.
At present, Tesla has just a 3 per cent share of China’s market for battery-powered EVs, according to Bloomberg, but the country is still its second-largest source of revenues. Boosted by subsidies, the country outpaces the US both in new electric car sales, and its total stock of electric cars. In the first quarter of the year, China saw sales of nearly a quarter of a million electric cars.
