Tesla (TSLA) Moves a Step Closer to Production in China
China, the world’s largest market for autonomous vehicles, is mulling over relaxing rules pertaining to the requirement of tying up with a local company, for manufacturing vehicles in the mainland, per a Wall Street Journal news. This may come in handy for Tesla, Inc. TSLA for ramping up production in China.
According to a draft proposal, China is preparing plans to allow foreign companies to manufacture electric vehicles in free-trade zones even without having a Chinese local partner. However, vehicles sold in the country will be subject to import tariffs.
Although electric cars occupy a small part of the global automobile market, Tesla has acquired a significant market share within this niche segment. Automotive revenues increased 93% year over year in second-quarter 2017, due to a 53% rise in total vehicle deliveries. The company is witnessing growing sales on the back of the strong performance and impressive design of its products.
In fact, Tesla has long been considering expansion into China. However, it was having problems in finding a local partner. This relaxation may prove to be of huge significance for the pioneer in electric vehicles.
Some important companies in the auto space include Toyota Motor Corporation TM, Allison Holdings, Inc. ALSN and Volkswagen AG VLKAY.
Toyota has a long-term growth rate expectation of 7%.
Allison Holdings has an expected long-term earnings growth rate of 10%
Volkswagen has an expected long-term earnings growth rate of 8.9%.
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