Multibillion-dollar electric vehicle manufacturer Tesla, is lobbying the White House to speak with Chinese president Xi Jinping during his visit to the US next month. The company is concerned that Chinese regulations, requiring overseas companies to partner with local firms, are too restrictive compared to US regulations. This comes at a time when an array of Chinese automotive companies have emerged in the US, with indirect Chinese government funding, where they are allowed to trade independently of any local partners.
Tesla has many more concerning issues, all which have come up just months after the company announced the creation of the largest automotive factory in the world - to be located in China.
Does Tesla have a point?
The Chinese government has been directly and indirectly funding many Chinese businesses in their pursuit of overseas markets. The automotive industry is not the first, and it will certainly not be the last, to receive financial assistance from the Chinese authorities. However, while there is nothing wrong in backing Chinese companies in overseas markets, it is the restrictions to overseas companies operating in China which is of greatest concern.
Quote from ElectricForum.com:- "As soon as we saw the slightest bit of negative news about Tesla, the estimated loss per car, the news since then has been very very positive. We have seen talk of new vehicles, competitive prices and even better news on the recharging front. Is Tesla in the middle of a major PR campaign?"
Even though Tesla has made an operating profit in years gone by, it has yet to post a pre-tax profit having invested heavily in research and development. The company certainly has a valid argument with regards to the difference in restrictions between the US and the Chinese market and the fact Tesla has made all of its patents available to the wider industry makes for a somewhat one-sided situation. In theory, there is nothing wrong in Tesla sharing its technology with fellow automotive companies but why should there be restrictions on operating in overseas markets?
What has the White House had to say?
So far the US government has been quiet on the issue of Chinese automotive regulations but surely we can safely assume that the subject will be on the table when the Chinese authorities visit the US next month? It is also worth noting that the US government has invested heavily in the electric vehicle market, although perhaps not as heavily as some had hoped. Therefore an imbalance in trade regulations will limit potential returns on this investment as well.
The beauty about Tesla is the fact that, while that the company is profit orientated, it takes a long-term view having implemented an array of long-term strategies. The simple fact is that the more successful electric vehicle companies in the world, the easier it will be to educate the general public about their benefits in the longer term. This in itself will see the best of the electric vehicle companies claiming the greatest market share - which is when the gloves will be off from a business point of view!