According to the news report by Reuters, in anticipation of China scrapping its rules with regard to foreign companies owning new-energy vehicle (NEV) firms, Tesla has registered a new electric vehicle company in Shanghai.
Tesla (Shanghai) Co. Ltd. was registered on the 10th of May, according to the filing at the National Enterprise Credit Information Publicity System. The wholly owned subsidiary of Tesla US got its business license from Pundong New Area’s market regulation bureau.
The new Tesla will focus on manufacturing electric vehicles, batteries, energy storage equipment, photovoltaic products as well as spare parts. The company would also be involved in the import and export as well as wholesale of these products.
Tesla US has been in negotiations with the Chinese authorities for some time now to be given permission to set up its own factory in Shanghai, so that it can produce its electric vehicles locally. The electric car maker has been hoping to strengthen its position in China’s rapidly growing electric car market. Additionally, the car maker will then be able to avoid the high import tariffs that China imposes – especially on US made cars.
Tesla (Shanghai) Co. Ltd. has been registered as a company in the east Shanghai region, inside the free-trade zone. Tesla’s head of China, Zhu Xiaotong will be the new company’s legal representative and Tesla’s Hong Kong branch, Tesla Motors HK Ltd. as the only shareholder. The newly established wholly owned subsidiary has registered capital of 100 million yuan (about $15.8 million).
Tesla also has other wholly-owned companies registered in China, however, these focus on sales as well as research and development.
Currently all Tesla cars sold in China are imported from the US. Chinese authorities recently announced that they would be removing limits on foreign companies’ ownership of ventures such as the NEV starting this year. They also said that all automotive restrictions in terms of foreign ownership would be done away with by 2020. This is a diametric shift for the country, as it has not allowed any foreign car company to own more than 50% stake for more than 20 years.
US car makers have also been caught between the two countries as trade tensions remain high between the US and China. Hopefully, these tensions will ease out with the second round of trade talks scheduled to take place in Washington this week.
Tesla has long fought to maintain complete control of its own plants and protect its in-house technology. Till now, the future looked dim for the electric car maker as it continued its fight against Chinese authorities with regard to ownership and the sharing of its technology with local counterparts. Tesla’s Chief Executive Officer, Elon Musk went so far as to say that they were creating an uneven playing field. In fact, it looked like Elon Musk’s gamble on China was going to fail.
Now, with China promising to loosen its hold on the car market, the biggest gains will be seen by NEV ventures such as Tesla’s. Now, Tesla has announced that it would unveil the location of its own Gigafactory in China. The Shanghai Municipal Commission of Economy and Information Technology also stated that the Chinese government and Tesla had kept communication channels open and would continue to discuss Tesla’s plan in their municipality.
Despite money problems and high production costs, Tesla’s global revenue grew more than 67% to almost $12 billion last year. Of this amount, about $2 billion of the revenue was contributed by the Chinese market. The company’s sales grew by more than 90% from last year in China.