China represents a car industry that is on the verge of exploding and represents one of Tesla’s most lucrative opportunities. There have been rumors flying back and forth of Tesla starting up production in China, but none of those ended up being true, and any future plans to open up shop might come harder than expected.
Tesla can continue importing cars to China, but in 2016, only 3.5% of new vehicles in China imported. This represents a very small opportunity for Tesla unless it produces out of China. Production is difficult because of a recent plan to halt issuing permits to produce electric vehicles (per Bloomberg):
“China plans to halt issuing permits to produce electric vehicles because of concern additional approvals may lead to a glut in the world’s biggest auto market, according to people with knowledge of the matter.
The National Development and Reform Commission, which oversees new investments in the auto industry, wants to evaluate the program after handing out 15 production licenses since March 2016…”
There are a number of hoops to jump through if you are a foreign OEM wanting to produce an electric vehicle in China:
China is the world’s largest EV market, but with hefty restrictions in place like these, who knows if Tesla will get a piece of the pie? Things may change at some point but as of now, it looks like Tesla is better off focusing on their India expansion.
SOURCE | Forbes