Placeholder Image

Subtitles section Play video

  • Narrator: Although Tesla is based in California,

  • China seems to be where it's found its biggest supporters.

  • In 2019, the company saw its China sales increase

  • by 161% from the previous year.

  • That's 40,000 newly registered Teslas.

  • Despite the recent pandemic that saw Chinese car sales

  • decline by 42% for the first quarter of 2020,

  • Tesla bounced back immediately with record-setting months

  • in March and April.

  • But Tesla's successful run in China hasn't come

  • without plenty of help from tax exemptions on sales

  • to billions of dollars in funding for the construction

  • of its Shanghai factory.

  • China and Tesla have formed an uncommon

  • and symbiotic relationship, but why?

  • First, we have to go back to how Tesla got there.

  • Since 2015, China has been the world's

  • largest electric car market.

  • As Tesla saw its China sales triple to $1 billion for 2016,

  • then reach $2 billion for 2017,

  • it became clear the EV builder had an audience there.

  • However, as other automakers had already found,

  • the US trade war with China was a major obstacle

  • to selling cars there.

  • With heavy taxes being slapped on Teslas imported to China,

  • an $80,000 Model S from the US was selling

  • for around $140,000 in China.

  • The only way to sell cars to Chinese consumers

  • on a larger scale would be to build them there.

  • But the cost of producing cars in China was not cheap.

  • Government policy forced foreign automakers

  • to work with a joint venture partner in China

  • and share half the profits.

  • However, in 2018 the country began rolling back

  • these restrictions.

  • Elon Musk was quick to take advantage and that July,

  • signed an agreement to build a wholly owned factory

  • in Shanghai.

  • With $1.6 billion in funding from Chinese banks

  • and record-fast approvals by the government,

  • Musk constructed Tesla's third gigafactory.

  • By August 2019, the plant was already building vehicles.

  • The factory is currently making 3,000 cars a week

  • or around 150,000 a year.

  • By the end of 2021, when the factory is fully operational,

  • Musk plans for it to be churning out 500,000 cars annually.

  • And with China now exempting Model 3s from a 10% sales tax,

  • there's no telling how many the EV giant stands to sell.

  • So why has Tesla received such a warm welcome from China?

  • To start, there's the incredible amount of money

  • China stands to make off the factory alone.

  • The Shanghai facility was financed almost entirely

  • through state-controlled banks

  • who can expect a pretty big return on their investment,

  • plus, Tesla purchased a 50-year lease of the land,

  • which is money that goes directly to the government.

  • Additionally, 30% of the factory's parts

  • are purchased locally.

  • Musk says by the end of 2020,

  • he plans for that to reach 100%.

  • On a wider scale though, Tesla could be the boost

  • China's declining car market needs.

  • In 2019, total car sales in China fell by 8%,

  • after falling 3% in 2018.

  • More recently, factory closures due to COVID-19

  • had disastrous effects on this year's first quarter sales.

  • However, the industry is steadily recovering,

  • largely due to EV sales with Tesla accounting

  • for a whopping 30%.

  • With sales already improving in both March and April,

  • the automaker could play a major role

  • in reviving the country's auto sector.

  • Despite adding competition to China's enormous EV market,

  • Tesla could also have benefits

  • for the country's domestic brands.

  • Chinese companies like NIO and Xpeng

  • that were once dubbed "Tesla-killers" are now struggling.

  • While they are some of the most recognized

  • electric car brands in China,

  • they are virtually unheard of in the West.

  • A well-known international brand like Tesla

  • could help introduce the country's EV industry

  • to global market competition, giving them exposure

  • to buyers in America and Europe.

  • There's also the environmental aspect.

  • China, with a population of 1.4 billion

  • and some of the world's most heavily polluted cities,

  • is doing everything it can to prioritize EVs.

  • For Chinese consumers, electric cars are cheaper

  • to register and they're significantly more convenient.

  • As of 2016, at least a dozen major Chinese cities

  • have mandated even-odd policies.

  • Under these conditions, traditional vehicles

  • with license plates ending in an odd digit are allowed

  • on roads on odd dates and those with an even digit

  • on even dates.

  • EV drivers can take their cars out on any day.

  • Battery-powered vehicles make up 4.7

  • By 2025, China aims for EVs to account for 25100:05:13,170 --> 00:05:14,960 of all cars sold,

  • with Tesla potentially leading that charge.

  • Yet China welcoming Tesla with open arms is a risky move,

  • the country spent years and billions investing

  • in domestic EV manufacturers

  • and developing their own domestic market.

  • Now they've shifted focus, investing in a foreign company

  • on their soil.

  • In the end, Tesla could provide huge benefits for China

  • and open up the country's market on a global scale.

  • But, we could just as easily see a less happy ending

  • with Tesla running China's domestic companies

  • out of business.

  • Vice versa, Tesla could be overcome by the amount

  • of local competition.

  • Both Musk and China are taking a massive gamble

  • and only time will tell how this relationship ends up.

Narrator: Although Tesla is based in California,

Subtitles and vocabulary

Operation of videos Adjust the video here to display the subtitles

B1 US tesla china factory musk chinese domestic

Why China Loves Tesla

  • 25 0
    Mackenzie posted on 2020/05/20
Video vocabulary