Tesla Inc. (TSLA, Financial), the U.S. automaker that specializes in electric automotives, said that it has expanded its charging network in the world’s largest car market, China.
Bird’s eye view
Tesla’s journey began in 2014 and 2015 when the company was struggling to make sales in China, but it came back strong in 2016 and 2017 when the company flourished massively. In 2016, Tesla managed to triple its sales to more than $1 billion. The company generated massive revenue in 2017 as well (though the growth rate wasn’t as high as in 2016). The electric car maker doubled its sales to over $2 billion in China in 2017.
Now that the company has expanded its charging network in China, Tesla’s shares soared 3.5%. As of now, the company has more than 1,000 superchargers in China, which can charge vehicles in one hour. In addition, the electric automaker has more than 2,000 regular chargers.
As of now, Tesla imports cars from California to China with an import tariff, which can be evaded if the company produces cars directly in China. Thus, to get rid of this cost, the automaker has decided to set up a manufacturing plant in China. However, there are several hurdles that the Chinese regulatory systems have put in front of it.
For a foreign automaker to sell cars in China, one of the best ways is to find a Chinese partner. On the negative side, the company will have to disclose all the trade secrets to the partners. Another way is just the opposite of this where the company can keep trade secrets but end up paying tariffs.
China’s efforts towards electrification
Being the most populated country in the world, most of the China vehicles run on fossil fuels emitting harmful substances in the air. This led the Chinese government to promote the concept of electric vehicles.
In addition to investing billions of dollars in electric vehicles, the government said that it would set up 800,000 charging points across the country shortly. Looking back, the company got 3,36,000 electronic vehicles registered last year, compared to only 1,600,000 electronic vehicles registered in the U.S.
Last word
China is the prime market for electric cars due to the fact that not only is it larger than the North American market but also because the Chinese government is keen to enter an environmentally friendly world through promotion of electric vehicles. Tesla’s sales last year were helped by mammoth sales of the Model X. Both the government and the company are working in tandem towards installation of public charging stations.Â
Disclosure: I do not hold any position in the stock mentioned in this article.
