China’s state-run newspaper Global Times questions in a recent article whether Tesla’s new commitments in China will help the country to take over the electric car market, as Apple’s investment in Chinese factories helped it to dominate the smartphone manufacturing industry.
China’s state-run newspaper, the Global Times published an article recently titled “Can China copy ‘iPhone model’ with Tesla?” in which the communist state-run newspaper questions if Tesla’s latest move into China will allow the country to dominate the electric car manufacturing market as Apple’s use of Foxconn factories has allowed it to dominate the smartphone manufacturing industry.
The Global Times starts by noting some of Tesla’s business operations in the country writing:
At this crucial moment, Tesla has chosen to invest in China – a decision which has changed the company’s future.
Tesla is the first wholly foreign-owned car company in China. It does not partner with Chinese counterparts to share profits. Its move comes as China is putting tighter controls on technology transfers.
The Global Times does question whether Tesla’s operations will be beneficial for the country, noting that the increased availability of Tesla vehicles in the country could lead to more competition for Chinese-owned electric car manufacturers. But the Global Times reveals some of the Chinese government’s hopes for the investment, writing:
The Chinese government hopes Tesla can become a bellwether to represent industry standards and mobilize related industrial chains and supply chains in China. Then, it could boost the localization of the design and manufacturing of electric cars, and could eventually drive up the Chinese electric car industry.
In the past, China had a so-called “iPhone model” for the smartphone industry. Foxconn was the original equipment manufacturer for Apple’s iPhones in China, stimulating the middle and lower sections of the smartphone industrial chain. Battery producer BYD Electronic, chip manufacturer MediaTek, camera supplier Sunny Optical Technology, acoustic component provider AAC Technologies and lens maker Lens Technology all benefited from Apple’s presence in China. Ultimately, made-in-China smartphones were fully developed. Seemingly, China wants to replicate the “iPhone model” in the electric car industry.
The article further notes that Elon Musk’s operations in the country have only just begun and are expected to expand, which will likely force domestic carmakers to improve their own products in order to compete with the firm. It appears that the Chinese government hopes that Tesla’s presence will improve the overall auto manufacturing industry in the country:
Tesla’s China investment scheme has just begun. It is not yet clear whether or not China will be able to replicate the “iPhone model” in the electric vehicle industry. Domestic carmakers will need to improve their learning, design and manufacturing abilities rather than calculating how many subsidies they could get from the government, or what level of funds they could obtain from venture capital. By improving the overall environment of the auto sector, China’s goal of bringing in foreign companies such as Tesla can be achieved.
Read the full article which gives an insight into the Chinese government’s strategy behind banking on Tesla here.