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Musk: Tesla will have a factory in China

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Re: Musk: Tesla will have a factory in China

#31

Post by hangonhn »

I wonder how they're going to navigate that since companies in China must be 51% Chinese owned. This is why Chinese cars are often joint ventures between foreign and domestic car companies. Chinese car companies would love nothing more than to acquire advanced electric car technology because they're so disruptive. They can in a flash disrupt all the technological advantages foreign car companies have in their technical know-how around gasoline and diesel engines.

If Tesla's IPs and manufacturing capabilities end up in Chinese hands, all foreign car companies would be so screwed in China and possibility else where. The Chinese have shown a lot of boldness in their infrastructure projects. I can imagine them building charging stations throughout the country in just a few years. Once that happens, all gasoline cars would be at such a disadvantage. The relative efficiency of electricity generated from power plants vs. gasoline cars could have a significant effect on China's oil import (their major Achilles Heel) and pollution. China has no qualms about nuclear power. BTW, China also has the world's biggest automobile market.

The Chinese would love to have a Chinese Tesla. If I was the Chinese, I might even consider buying up Tesla.

Re: Musk: Tesla will have a factory in China

#32

Post by fiatmoney »

ihsw wrote: post #25
fiatmoney wrote: post #23

Earlier quoted context omitted.

The entire point is that the high cost makes domestic production more attractive, because you can offer a lower price than the foreign-produced, tariffed variety.

And when domestic production just doesn't happen, what then? Will you allow your population to languish in poverty while prices are high due to an artificial floor? PS4s are a luxury, but when we apply the same logic to necessities then that argument falls on its face fairly quickly. Tariffs are also susceptible to political wrangling, where taxes are levied selectively.

"Necessities" are irrelevant. If you are worried about, eg, the ability of the poor to afford food, and have a simultaneous goal of promoting domestic industry, the optimal policy is income subsidies + the tariff you would have imposed anyway.

In fact, you can use the tariff to finance the income subsidies, and it will work at some tariff level as long as the right proportion of the market for that good is not receiving the subsidies.

Further, the industry growth prompted by the tariff is likely to disproportionately help those the income subsidy would be targeting. You'll notice the market for unskilled labor in the US is not exactly thriving.

The political economy argument is more compelling, but in practice "free trade" ends up being anything but. International trade agreements usually take the form of market access conditioned on the kinds of regulation friendliest to the most politically influential (~largest) actors. This is how you get, eg, "free trade" agreements that massively strengthen copyright regimes, to the benefit of "original" content producers and the detriment of content remixers and consumers.

Re: Musk: Tesla will have a factory in China

#33

Post by prawn »

mrmincent wrote: post #28

Ford & GM (Holden) are ceasing car production in australia over the next couple of years. I'd love to see tesla sweep in and pick up all the manufacturing plants on the cheap and take over.

I agree completely. Plus build a supercharger network down the East Coast and from Melbourne to Adelaide. Make driving the Great Ocean Road in an electric vehicle a "thing to do" when you're in Australia.

We don't have quite the population of the US, but the potential for solar here is strong too.

Not to mention that Woomera may align with Elon's SpaceX interests.

And then, if we're still dreaming, a Hyperloop from Sydney to Melbourne, currently one of the most flown travel legs in the world.

Re: Musk: Tesla will have a factory in China

#34

Post by schuke »

hangonhn wrote: post #31

I wonder how they're going to navigate that since companies in China must be 51% Chinese owned. This is why Chinese cars are often joint ventures between foreign and domestic car companies. Chinese car companies would love nothing more than to acquire advanced electric car technology because they're so disruptive. They can in a flash disrupt all the technological advantages foreign car companies have in their technic…

Foreign automakers like VW and Toyota have been producing cars with joint venture companies in China for decades yet they still keep the core technologies to themselves. Their Chinese partners still struggle to make anything remotely close. For more than a decade the joint venture model has been seen as a failure for the Chinese auto industry. So perhaps Tesla wouldn't worry that much about losing their tech.

Re: Musk: Tesla will have a factory in China

#35

Post by moca »

hangonhn wrote: post #31

I wonder how they're going to navigate that since companies in China must be 51% Chinese owned. This is why Chinese cars are often joint ventures between foreign and domestic car companies. Chinese car companies would love nothing more than to acquire advanced electric car technology because they're so disruptive. They can in a flash disrupt all the technological advantages foreign car companies have in their technic…

Assembly line in China makes sense. VW and Audi have been there since 80s. Anything more than assembly line would be very questionable. It is much like how Apple builds iPhone in China, plus many others.

Re: Musk: Tesla will have a factory in China

#36

Post by moca »

zackmorris wrote: post #12

The next-to-last sentence caught my eye: "The automaker recently announced that import tariffs and transportation costs will push the price of its Model S in China to $121,000, or roughly 50 percent more than the plug-in sedan costs in the U.S." We'll never hear it mentioned in American news, but we had import tariffs up until the 80s when we adopted supply-side economics as our ideology. We wonder why our manufactur…

Tariffs is a meaningful way to adjust trade balance. Whether it works in specific situation is up to debate. This is similar to how U.S. uses income tax cut/raise to adjust economy growth and deficit, and the result is hard to predict.

As far as I can see, Chinese government has been pretty successful using all kinds of economic tools to manage its growth over past 30 years. Import tariffs is one of the tools. I think it would be fair for US to have some tariffs against China to balance the trade. The real problem is such policy has not political appealing at this time. If raising tariffs help future US businesses to compete against China, since such businesses don't exist today, there is no immediate political or economical return, so it is unlikely to happen.

Re: Musk: Tesla will have a factory in China

#37

Post by speeq »

ChrisNorstrom wrote: post #20
coldtea wrote: post #8

Earlier quoted context omitted.

Yes, because Apple lost their trade secrets by having their factories in China, right?

" If we published patents, it would be farcical, because the Chinese would just use them as a recipe book" - Elon Musk

He's talking about SpaceX there because the enforce-ability of patents against governments is questionable - Tesla actually files a lot of patents.

Re: Musk: Tesla will have a factory in China

#38

Post by easytiger »

felipe wrote: post #29
paganel wrote: post #19

Earlier quoted context omitted.

I'm not an American and I'm what most people would call a "libertarian", but if you really do believe in "protection tariffs" then ask yourself if you're prepared to pay ~$1,800 for a PS4, for example. ( http://www.destructoid.com/playstation-4-will-cost-1-850-in-... )

Brazilian here: A local tax expert pointed out that Sony is adding a huge profit margin on top of the taxes [1]. Sony has disclosed the tax figures to the media but not their profit margin, and trying to blame it only on taxes because they know the Brazilian consumer will believe. Some suspect that Sony is importing at an even higher price than the retail US price. No one knows for sure, but clever US sellers were bu…

> Sony simply did not want to incur the labor costs and risks associated with investing in the local tech industry. Nothing wrong with that (it's their decision), but they are not being truthful to the local consumer.

You can't expect them to set up a factory in every single geopolitical location that imposes these rules.

Re: Musk: Tesla will have a factory in China

#39

Post by daughart »

adventured wrote: post #16
cashmonkey85 wrote: post #14

Earlier quoted context omitted.

I hope no one else thinks this is a good idea. The problem isn't corporate control of government stopped this but the fact it would do so much damage to the American economy and maybe start a trade war.

It would absolutely start a trade war, that America would lose very quickly. The incorrect assumption here is that America has more to gain than lose from doing that, when such couldn't be further from the truth. America is temporarily riding on a fake consumer driven economy supported by the cheapest debt in world history and cheap imports from other countries like China; emphasis on temporary. Our ability to rapidl…

"Why hasn’t China “nuked” us? If Beijing sold Treasury securities in massive quantities, it would cause a panic, but the world’s deep markets would quickly adjust. The Chinese, we should remember, would get back dollars. Because they are doing this to undermine America, they would have to either buy hard assets or convert the proceeds into other currencies. As a practical matter, China’s deficit-plagued central government needs the income so most of the funds would go into interest-bearing instruments denominated in euros, pounds, francs, and yen.

The euro, pound, franc, and yen would obviously soar in value, so Brussels, London, Bern, and Tokyo would have to go out into the markets to rebalance their currencies. The only practical way to rebalance would be to buy . . . dollars.

So why don’t the Chinese go nuclear? They know that in a short period calm would return to the markets, America’s debt would end up held by its friends, and they would be stuck with a wide variety of assets their managers had shunned in the first place."

G.G. Chang, Forbes OP/ED 10/06/2013

Re: Musk: Tesla will have a factory in China

#40

Post by scott_karana »

mrmincent wrote: post #28

Ford & GM (Holden) are ceasing car production in australia over the next couple of years. I'd love to see tesla sweep in and pick up all the manufacturing plants on the cheap and take over.

Why are the plants closing? Ford of North America has been fairly profitable, so I hope it's not a labour pricing issue in Australia, or there'd be no point :(
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