Tesla Motors (TSLA) CEO Elon Musk said he expects to be making cars in China in the next three to four years. The company is preparing to begin deliveries of the Model S electric vehicle in China this month, and is building a network of battery charging stations throughout the country. In the associated video, Yahoo Finance Editor-in-Chief Aaron Task talks with Lauren Lyster about Tesla potentially manufacturing its vehicles in China.
Selling cars that are manufactured in the country would allow Tesla to avoid paying a 25% import tariff. However Task – who disclosed he owns Tesla stock – points out that manufacturing cars in the country would mean they’d also have to share technology with China. “I can’t imagine that Elon Musk and Tesla would want to do that.”
Even if the cars were manufactured in China, it might be difficult to get people to buy them there. First, there’s the price. The Model S will go on sale in China for 734,000 yuan, or $118,000. That’s compared to the $71,000 price tag in the U.S., before federal tax credits. The price difference is due to shipping charges, taxes and import duties in China. And while there are 90 bids for every one gasoline car permit in Beijing, the demand for new-energy permits isn't nearly as high: only 1,428 people applied for 1,666 new energy permits in the city.
“The guy does amazing and incredible things that nobody else can do, or nobody else even thinks to do,” said Task. However, with the issue of technology sharing, in addition to a slowing Chinese economy that’s becoming more competitive, he was cautious about the move to build Teslas in China. “I’m hoping this works out, but it does seem like a very bold and potentially risky play,” Task said.