Reputed American automaker and energy storage company Tesla is on the verge of a major accomplishment, with its forthcoming business expansion in the China market. As per authentic snippets from the auto industry universe, China is the largest automotive market in the world since 2008. The year 2016 witnessed Tesla earning a valuation of more than USD 1 billion from China. This revenue has been estimated to be more than three times Tesla’s initial market share, which has subsequently prompted the company’s officials to expand their business base in China. Through a strategic agreement of sorts, Tesla is likely to contribute toward the growth of global battery electric vehicle market.
Tesla’s agreement with China will allow the automaker to construct its facilities in its Lingang development zone. However, as per the current rules and regulations, the company needs to collaborate with at least one local automaker. As per the latest reports, Tesla’s executives have not yet given a complete nod for this agreement.
It has been stated that setting up a local production plant would prove to be extremely beneficial for Tesla, and is likely to contribute toward Tesla’s revenue over the years ahead. Authentic reports state that in 2016, Tesla had manufactured about 80,000 cars. The organization plans to increase its annual manufacturing capacity to seven times its existing capacity, i.e., 500,000 per year, by 2018. Establishing a facility in China is speculated to contribute heavily toward this goal. A news report also states that the availability of localized manufacturing facilities will help the company avoid about 25% of tariff, which will ultimately reduce the overall cost of the vehicle. Additionally, escalating commercialization of low cost vehicles is expected to positively favor Tesla’s business expansion.
Under this agreement, Tesla is allowed to establish all the manufacturing facilities in the Lingang development zone, which is a part of Shanghai city. Apart from this, the initiation taken by Chinese government to promote fully electric and plug-in hybrids vehicles to maintain clean environment with emission free automobiles is likely to prove beneficial for Tesla. In addition, this agreement will help the Chinese automakers achieve a competitive position in the non-emission vehicles sector.
Tesla’s widespread experience in the field of electric vehicle production is predicted to enhance the profile of local Chinese automakers, via this agreement. According to experts, this is also a lucrative opportunity for Tesla to expand its profit margins and widen its business scope further, across the Asia Pacific domain.
Sunil develops content for Market Size Forecasters. A Post graduate mechanical design engineer by qualification, he worked as an intern at the defense lab for one year in the engine design and development department before switching his professional genre. Following his technical writing skills, he ...