SHANGHAI: Tesla Inc. unveiled its first vehicles built in China, a milestone for Elon Musk’s company as it prepares to start sales of domestically-made electric sedans in the world’s largest auto market.
Assembled in Tesla’s new Shanghai Gigafactory, which only broke ground in January, the first Model 3 sedans came in blue and were emblazoned with the brand name in Chinese characters. Selected local media were invited late last week to test drive the vehicles, which start at about US$50,000.
China’s first plant wholly owned by a foreign carmaker — and Tesla’s first outside the United States — is a crucial test of Musk’s bid to keep his carmaker profitable as he bets on Chinese demand for electric vehicles.
The plant is producing cars in small quantities as part of preparations. Tesla is working with local authorities to obtain manufacturing certification and hopes to get it by year-end, chairman Robyn Denholm said last week here.
In a related development, shares of Chinese electric-car makers fell in the wake of a Bloomberg News report that said regulators may cut subsidies further on the embattled industry.
BYD Co., China’s biggest maker of new energy vehicles, slid 2.8% in Hong Kong. BAIC BluePark New Energy Technology Co., the country’s biggest maker of pure electric cars, retreated 2.9% in Shanghai, while Contemporary Amperex Technology Co. Ltd., the world’s biggest car-battery maker, dropped 2.5%. Hong Kong’s Hang Seng Index fell 2.6% and the Shanghai Composite Index fell 1.8%, their biggest losses in three and four months, respectively.
China will gauge demand for EVs before making a decision on whether to cut subsidies for the automobiles again, Bloomberg reported Friday, citing people familiar with the matter. The government, which began subsidizing EV purchases in 2009 to promote the industry, has been gradually reducing handouts to encourage automakers to compete on their own.
China’s car market is experiencing a prolonged slump that has dragged down the global EV sector as the country accounts for about half of the world’s sales of electrified cars.
Still, regulators continue to face pressure to reduce handouts as state support fueled concerns about a bubble in the industry.
The latest funding cut took effect in June, when the government cut subsidies of as much as 50,000 yuan ($7,165) per EV by half. Chinese NEV sales then began falling in July and have been dropping since. China’s top EV makers have slashed earnings outlooks and analysts have recently questioned whether the likes of Shanghai-based NIO Inc., once regarded by many as China’s Tesla Inc., will survive.
Warren Buffett-backed BYD last month reported an 89% decline in third-quarter earnings and warned profit could fall as much as 43% this year. BAIC BluePark also forecast a 2019 loss in its earnings update.
