Will Tesla Expand in China, Or Head the Export Route?

Tim Healey
by Tim Healey

What does the future hold for Tesla in China? Expansion, or exports?

That’s the question being asked by an Automotive News story today.

Earlier this year, the outlook for Tesla in China looked rosy. But net orders for cars have fallen by nearly half this quarter amid concerns about the company’s vehicle safety, along with how it collects and stores data, and at least one report suggests that the company could end up exporting cars produced in China to Europe.

Not long ago, analysts were predicting expansion for Tesla in China. One analyst mentioned that in addition to planned plants in Texas and Berlin, Tesla could build another factory in China.

China’s Passenger Car Association will release May’s sales data next week. Sales dropped more than 25 percent from March to April, with more than half of the over 25,000 cars produced in China being exported.

Tesla stock did rise a bit in Friday’s early trading after a slight fall on Thursday, though the stock is down 35 percent from its peak in January.

For reference, China is the second-biggest market for Tesla, following the U.S. It builds Model 3 and Model Y vehicles in Shanghai.

Like the analysts, we too are curious about what happens. Tesla appears to be at a crossroads in China — if expansion was in the cards, it would obviously be great news for Elon Musk and company. Not just because growth is generally good, but because China is obviously a huge market. The country’s EV market is arguably more competitive than here, thanks to the presence of both several startups and more traditional automakers like BYD that build EVs, with roughly 20 makes in play, but Tesla shipped a half-million units there in 2020.

Obviously, the company would prefer to sell Chinese-made Teslas in China instead of shipping them to other markets. But the company has been dealing with a series of headaches for quite some time now. Between concerns about reliability here in the States and the ability of Teslas equipped with autonomous-driving software to perform those functions in a safe manner, and concerns about data, Tesla has enough headaches to make Musk want to take some time off to host a comedy show. Oh, wait.

All this would seem to confirm earlier reports that we highlighted regarding canceled expansion plans at the Shanghai plant.

At the moment, it sure looks like contraction, rather than expansion, is the name of Tesla’s China game.

[Image: Tesla]

Tim Healey
Tim Healey

Tim Healey grew up around the auto-parts business and has always had a love for cars — his parents joke his first word was “‘Vette”. Despite this, he wanted to pursue a career in sports writing but he ended up falling semi-accidentally into the automotive-journalism industry, first at Consumer Guide Automotive and later at Web2Carz.com. He also worked as an industry analyst at Mintel Group and freelanced for About.com, CarFax, Vehix.com, High Gear Media, Torque News, FutureCar.com, Cars.com, among others, and of course Vertical Scope sites such as AutoGuide.com, Off-Road.com, and HybridCars.com. He’s an urbanite and as such, doesn’t need a daily driver, but if he had one, it would be compact, sporty, and have a manual transmission.

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  • Kendahl Kendahl on Jun 04, 2021

    For some time, Teslas have been coming to the United Kingdom from China instead of California. There are several YouTube videos comparing quality of cars from the two different sources. Chinese and California cars also come with different battery technologies.

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    • Mcs Mcs on Jun 05, 2021

      @luke: Yeah, I kind of like that idea too. No nickel, so it's cheaper. The 4680 tabless and the other technology should push the gravimetric density up. Nickel availability and cost favor your theory.

  • Slavuta Slavuta on Jun 04, 2021

    I think something is brewing in China because Musk is now looking for Russia https://www.cnn.com/2021/05/21/business/elon-musk-tesla-russia/index.html

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    • Slavuta Slavuta on Jun 06, 2021

      @Luke42 And I love this model. I always said that American company mast make in the US what they sell in US. If they want to make something outside US - make it anywhere you want. Perfect.

  • Mike Beranek In the sedan game, it's now either Camry or Accord. The rest are just background noise.
  • Theflyersfan I know their quality score hovers in the Tata range, but of all of the Land Rovers out there, this is the one I'd buy in a nanosecond, if I was in the market for an $80,000 SUV. The looks grew on me when I saw them in person, and maybe it's like the Bronco where the image it presents is of the "you're on safari banging around the bush" look. Granted, 99% of these will never go on anything tougher than a gravel parking lot, but if you wanted to beat one up, it'll take it. Until the first warning light.
  • Theflyersfan $125,000 for a special M4. Convinced this car exists solely for press fleets. Bound to be one of those cars that gets every YouTube reviewer, remaining car magazine writer, and car site frothing about it for 2-3 weeks, and then it fades into nothingness. But hopefully they make that color widespread, except on the 7-series. The 7-series doesn't deserve nice things until it looks better.
  • Master Baiter I thought we wanted high oil prices to reduce consumption, to save the planet from climate change. Make up your minds, Democrats.
  • Teddyc73 Oh look dull grey with black wheels. How original.
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