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The theme of making the Tesla Model 3 in Shanghai continues. Now, in addition to using China-made products for batteries, it also uses Chinese-made motors, prompting concerns that China’s electric vehicle supply chain will outpace advanced countries. According to the Nikkei, the Chinese government At the time when official resources are used to strongly promote the development of the electric vehicle industry, it is impossible for Tesla to be 100% made in China.
“China Daily” stated that Model 3 electric vehicles produced at the Shanghai plant have begun shipping abroad to 12 European countries, including Germany, France, Italy and Switzerland. Analyzing the competitive advantages of China’s electric vehicle market, the report believes that one is the market and the other is the supply chain.
At the end of last year, when Tesla started production at the Shanghai plant, Tesla purchased about 30% of the parts from the local area and expected to reach 100% by the end of the year. The Nikkei report noted that Tesla has adopted batteries produced by Chinese supplier CATL, which is a strong competitor to Panasonic of Japan and LG Chem of South Korea. In addition, it also uses engines produced by Suzhou Inovance. Inovance has entered China’s electric vehicle manufacturing. Vendor supply chains such as WM Automotive Technology Group and Li Auto are now targeting major foreign manufacturers.
Others, such as thermal control parts maker Zhejiang Sanhua Intelligent Control, have been supplied to Tesla, Volkswagen and General Motors. In addition, Xiamen Hongfa, which makes electronic parts for electric vehicles, already has business deals with Tesla, Volkswagen and Daimler.
Nikkei believes that the reason China’s electric vehicle supply chain is favored is not just low prices, but fierce competition in the global market prompts them to develop their own technology. For example, Tesla chose CATL as its battery supplier not only because of its low price, but also because it has developed battery technology that does not use cobalt. China is establishing a supply chain that covers about half of the world’s electric vehicle market. A survey shows that the global market share of Sanhua Zhikong and Hongfa has surpassed Japanese companies.
In accordance with China’s policy goals, to create a huge national business cycle, the first step is to strengthen the national supply chain. Electric vehicles are an opportunity. China’s electric vehicle market saw its annual growth rate drop by 75% in February and resumed growth in July. The McKinsey report predicts that China will sell 3.5 million electric vehicles by 2022, up from 1.2 million last year.
The investment market is also very active. For example, WM Motor, an electric car startup, managed to raise $ 1.47 billion in a financing round in September. State companies and government investment accounted for a large part. Economies of scale will allow manufacturers to lower prices and unleash mass market momentum.
Not only is Tesla laying the groundwork in China, but BMW is also producing electric iX3 SUVs in China and selling them around the world. In addition, MINI-brand electric vehicles produced with Chinese automaker Great Wall Motors will also be sold. Worldwide. Daimler is also transferring smart car production to China.
The support of the Chinese government, innovative local companies and customers adopting new technologies have enabled China to rapidly develop the smart electric vehicle industry. Nikkei noted that electric vehicle parts produced by Chinese companies will arrive soon, and the possibility of 100% Tesla vehicles being produced in China is growing.
(Source of the first image: Flickr / Ken Lund CC BY 2.0)
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