Tesla has entered the Chinese market and established a new energy automobile factory in Shanghai. This news has already been announced. But some people are puzzled why Tesla is so anxious to settle in China. It is reported that Tesla will build a factory in Shanghai in the future. The 25% tariff is not reported. Tesla is willing to bear 25% of tariffs and is not willing to give up. This plan.
According to Forbes News, Tesla announced on October 22 that it will produce cars in China and signed relevant agreements to increase production capacity and sales in the Chinese market.
The signing of the factory agreement is a milestone in several respects. The Chinese government has also given Tesla more autonomy, and Tesla is also the first company that did not build a joint venture with a local Chinese company in a 50:50 ratio. To defend its intellectual property and vertically integrated production processes, Tesla also received many concessions from the Chinese government. With local production in China, Tesla's production costs will be reduced, but the details are not disclosed, and the possibility of tax relief and related subsidies in the future also exists.
Chinese symbolic victoryAttracting Tesla is a symbolic victory for China. In order to build an environment-friendly society, China intends to create the world's largest electric vehicle market. The 19th National Congress that just closed has once again proved the determination of the Chinese government.
However, further, Tesla's need for China may be greater than China's need for Tesla. According to the light vehicle sales forecast chart released by IHS Markit, China is a “land of competition†for global car companies. China surpassed the United States in 2009 and became the world's largest auto market. Car sales forecasts in Western countries are on a downward trend, while emerging markets are leading the global automotive market.
With the recent changes in the government's environmental protection policy, China has gradually become a big country in electric vehicles. In 2016, China accounted for 45% of global electric vehicle sales. China is also increasing the construction of electric vehicle charging equipment, and will also benefit high-end car companies such as Tesla. In 2016, the number of charging piles in China accounted for 44% of the global market, including 82% of fast charging piles. The demand for electric vehicles in the Chinese market is also growing faster than other markets around the world.
Although the conditions in the Chinese market are very favorable, as of now, Tesla has not achieved much success in the Chinese market. The government's subsidies drove the growth of demand for electric vehicles, of which low-end electric vehicles accounted for a large proportion, while Teslain faced a 25% import tariff and did not have much advantage in terms of price. In 2016, Tesla accounted for only 3% of the electric vehicle market in China.
Behind other high-end brands abroadTesla's performance in China is slightly different from other car brands. Like Western countries, cars are also a symbol of status in China, so consumers are also more inclined to buy high-end foreign brands. Foreign brands accounted for 60% of the Chinese market, and 7 of the top 8 models in 2016. High-end brands are also very eye-catching in the Chinese market.
Audi, BMW, Mercedes-Benz and Porsche's sales in the Chinese market accounted for 1/4 to 1/3 of their global sales, an increase of 10% over the past five years. In addition, Volkswagen's sales in China accounted for nearly 50% of global sales. The performance of other overseas brands in the Chinese market also indicates that if Tesla can reduce costs and prices in line with the local market level, then there will be good performance.
Increased global market share competitionWhy is Tesla's need for China greater than China's need for Tesla? The Chinese electric vehicle market will continue to grow without Tesla. The signing of Tesla and the Shanghai government is very timely and critical. With the take-off of the Chinese electric vehicle market, Tesla must pay attention to its performance in the Chinese market to maintain its leadership in the global electric vehicle market. Production in China is conducive to reducing production costs and prices, which not only benefits the Chinese market, but also is critical to the global market. Finally, like other industries, Tesla may also tap into local Chinese technical talent to promote its leadership in the global market.
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