Shanghai Lingang and Shanghai Electric both refuted rumors that Tesla's factory construction in China has been full of twists and turns

On June 23, Shanghai Electric Group issued a clarification announcement regarding the news of cooperating with Tesla to build a factory. The announcement stated, "So far, the company has not had any contact with Tesla, nor has it signed any joint venture agreement with Tesla. We have verified the above content and found that there is no material information that should be disclosed by the company but has not been disclosed."

On the evening of June 22, Shanghai Lingang Holdings Co., Ltd. issued a clarification announcement, stating that "so far, the company has not had any contact with Tesla, nor has it had any intention to cooperate with Tesla on its factory construction in China, and has not signed any agreement. Based on the attitude of being responsible to investors and stakeholders, after learning of the above report, the company verified the above content with the actual controller of the company, Shanghai Lingang Economic Development (Group) Co., Ltd. (hereinafter referred to as "Lingang Group"), and after verification, there is no material information that should be disclosed by the company but has not been disclosed."

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In fact, the news that Tesla was going to build a factory in China had already become an "open secret" as early as 2015, but the company had repeatedly refuted the rumor. At the end of April this year, Vice Premier Wang Yang met with Musk in Zhongnanhai, Beijing, and people from all walks of life were also speculating about this. The rumors appeared more frequently in June and broke out on June 22. However, they finally turned around with Shanghai Lingang and Shanghai Electric clarifying the situation.

On June 20, the news that Tesla was going to build a factory in Shanghai once again went viral on WeChat Moments.

At noon on June 22, news about Tesla's factory construction in China was escalated, and a picture of "Tesla's signing ceremony in Shanghai" went viral. From the picture, it can be seen that the representatives of the signing ceremony were the Shanghai Municipal People's Government and Tesla. Tesla did not immediately respond to the information that had been circulating on the Internet, which also triggered countless speculations.

Subsequently, Sankei Auto Weekly published an article saying that "Today (June 22), Tesla reached an agreement with the Shanghai government, and the Chinese factory will be located in the Shanghai Lingang Development Zone." At this time, Tesla's partners were still in the speculation stage. While many media outlets were seeking confirmation, the friendly media Daily Auto obtained the latest news through a telephone interview: Tesla's domestic production plan in China has finally come to light, and it will form a joint venture with Shanghai Electric Group Co., Ltd. (Shanghai Electric). According to information from financial media, Shanghai Electric's stock price also rose sharply.

That evening, Shanghai Lingang Holdings issued a clarification announcement, making Tesla's site selection in China a mystery.

On June 23, Shanghai Electric Group also issued a clarification announcement, and the news of Tesla's Shanghai factory came to a temporary end after twists and turns.

Although there are many variables in the news about Tesla's factory construction in China, it is certain that Tesla's localization plan will be getting closer. Tesla's official statement: "In order to better serve the Chinese market, Tesla is discussing with the Shanghai Municipal Government the possibility of building a factory in the region. As previously communicated, by the end of this year, our localization plan will be clearer. Tesla has been committed to deepening its presence in the Chinese market. At the same time, in order to better serve markets around the world, we are constantly evaluating potential manufacturing plant locations around the world. Although we expect most of the production to still be completed in the United States, we need to set up overseas factories to ensure that more local consumers can afford our products." This is also seen as Tesla's response to the event of building a factory in China.

Tesla Model S (Imported)

Why does Tesla want to build a factory in China?

First, electric vehicles in the United States enjoy federal tax breaks, but if sales reach 200,000 units, the $7,500 federal tax credit will be withdrawn. Earlier this year, Tesla electric vehicle deliveries in the United States reached 100,000 units. If Tesla sticks to its Model 3 production plan, by the end of this year, its deliveries should reach the 200,000 units required by the credit withdrawal policy, and Tesla will not have any tax breaks in the United States. After Trump announced his withdrawal from the Paris Climate Agreement, Musk turned against Trump and no longer had any illusions about the relaxation of subsidies in the U.S. electric vehicle market.

Compared with the US market, China's new energy vehicle market is more attractive. In 2016, China's new energy vehicle production and sales both exceeded 500,000 units, ranking first in the world. For Tesla, which has been deeply involved in the new energy vehicle market for 14 years, if it can be localized, it will help Tesla better develop China, the world's largest automobile market. It will not only solve the production capacity crisis, but also after saving tariffs and freight, the cost price will eventually benefit domestic consumers.

In addition, China's official policies on the development of new energy vehicles are also very attractive. Although the decline in subsidies for new energy vehicles is a foregone conclusion, the dual-credit policy for passenger cars issued by the Ministry of Industry and Information Technology not long ago has given the industry hope. According to the management of new energy vehicle credits in the dual-credit policy, Tesla will obtain a large number of new energy credits with its technology and endurance advantages after domestic production. At the same time, the additional new energy credits will be used for trading, which will bring huge benefits to Tesla and may change the current loss-making situation. Therefore, at a time when policies and markets are greatly favorable, it is not difficult to understand why Tesla is eager to build a factory in China.

Although it seems that Tesla's factory construction in China has been full of twists and turns, analysts from the research institute discussed the event of building a factory in China and believed that 1. Tesla's entry into China is an exploration and experiment of the policy of foreign investment in factory construction, which can be used as a reference for other latecomers; 2. As an authoritarian leader, Musk certainly does not want to cooperate with traditional car companies, and breaking up with Toyota is proof of this. It is best to have a non-industry company that can provide financial and policy support; 3. Tesla's domestic production will change the domestic new energy vehicle market ecology, and the catfish effect will stimulate the development of independent new energy vehicles; 4. In terms of power batteries, Panasonic's battery technology and cost leadership should have a certain impact on the domestic battery industry; 5. Tesla's service and marketing model should have a certain impact on traditional car companies, and there may be a trend of learning from Tesla in the future; 6. Tesla's domestic production can certainly bring good news to consumers, but whether its quality and service can be guaranteed as before remains to be seen; 7. If Tesla's domestic production plan can be carried out as expected, how much research and development will be done in China in the end?

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.