China Business

The race is on.

Chinese electric car startup Nio filed for a $1.8 billion IPO… But the Shanghai-based startup see itself, as Tesla main competitor in the world’s largest auto market place …  China.

The electric car business, especially in the premium, electric and SUV segments are outpacing all industry growth.

The premium market should grow between 12% to 15% annualized through 2022.

Battery-electric and SUVs could grow more than 50% .

If you compare the growth to California to China…

China will soon dominate.

Besides Tesla, Nio see a whole slew of new battery
electric companies…. including Alibaba (BABA)-backed up
by the Xiaopeng company…and Berkshire Hathaway
(BRKB)-backed BYD Co.

But many of the new companies are headed into the
lower and midrange markets

Only Nio sees Tesla as its premium EV competition in
China.

However, those rivals are eyeing the premium segment, and
Tesla may become the competitor…

Under a proposed rule change, foreign electric carmakers

could start building wholly owned factories this year, without
needing to partner with a local Chinese firm

That could erase Nio’s cost advantage.

Nio, plans to build two models, the ES8 and ES6 .

The ES6, is the smaller and cheaper.

Nio like Tesla are looking for a profit by going to China
larger customer base.

Nio posted a net loss of $502 million on revenue of just $7
million in the first half of 2018, followed by a net loss of
$759 million in 2017.

Tesla has plans to open a plant in Shanghai and will be the sole owner of the factory.

“As we mention earlier… China has always required foreign companies to enter joint ventures with domestic companies.”

“Tesla expects to begin construction in the near future, after it gets the necessary government approvals.”

“It will take the plant two years to build and two to three more years to produce 500,000 vehicles a year.”

“Tesla is deeply committed to the Chinese market, and we look forward to building even more cars for our customers here,” said a company spokesman.

China is now the largest market for new car sales, as more


Elon Musk meeting with Shanghai Mayor Ying Yong

Trump forced the joint venture when the United States applied $50 billion tax of Chinese imports.

China has denied it steals trade secrets. But in April, it announced it would start loosening its joint venture requirements for foreign automakers, with the restrictions.

“As we try to make cars more and more affordable, it’s going to be important to localize production,” Musk said at the company’s annual meeting in June.

Automakers build cars where they sell those cars.

Having a plant in China reduces the risk of future US-China trade disputes.

China has already imposed a 40% tariff on vehicles imported from the United States.

Tesla said Monday it can’t absorb that tax and would need to raise the price of Teslas in China as a result.

Cars built in China, are not subject to that tariff.