Tesla ‘negotiating’ with China on making electric cars locally as domestic demand may match the US in ‘five or six years’

PUBLISHED : Tuesday, 27 October, 2015, 11:24am
UPDATED : Tuesday, 24 November, 2015, 12:01pm

Tesla Motors is negotiating with the Chinese government on the possibility of producing its electric cars locally, according to its CEO.

Moreover, Elon Musk estimates sales of its vehicles in the world’s largest automobile market will equal or even exceed those in the US within “five or six years”, according to news reports.

This comes despite earlier reports in April suggesting the company had over 2,000 unsold vehicles in its China inventory.

Speaking to state-owned news agency Xinhua on Friday, Musk confirmed that his plans to localise the production and engineering of Tesla vehicles in three years are still “approximately correct”.

“We are trying to putting localised production in China. In the years to come, you’ll see some fairly significant partnership announcement,” Musk added.

In China, foreign automakers are required to partner with local car-makers in order to manufacture vehicles domestically.

READ MORE: Tesla Model S P85D luxury performance sedan launches in Hong Kong as demand for electric cars grows

Despite weaker sales in China, Tesla has been ramping up its supercharger network across the country. So far, the company has installed 84 superchargers that can charge a Tesla vehicle within minutes, and set up 1,500 so-called destination chargers at hotels, restaurants and shopping centres in China.

From January to September, Tesla reportedly sold 3,025 of its Model S vehicles in China, according to a release by the company.

Xinhua quoted Musk as saying that Tesla is now in a “pretty good place” in China.

However, the company is believed to have trimmed about 30 per cent of its work force in the country earlier this year in response to a lack of demand.

Although Tesla reported sluggish demand in April, sales of electric vehicles are slowly rising in China, according to data from the China Association of Automobile Manufacturers.

Sales of new energy vehicles, which comprise electric and hybrid vehicles, rose 220 per cent from the same period last year.

Earlier this month, Tesla unveiled its “autopilot mode” in Beijing, which pundits say demonstrates Musk’s determination to court the Chinese market.

The hands-free driving mode, which allows drivers to change lanes, adjust speed and even park the vehicle hands-free, has since been made available to Tesla owners in Hong Kong.

READ MORE: ‘Hands-free’ driving in Hong Kong: Tesla begins road-testing ‘autopilot’ mode, government yet to approve, SCMP takes it for a spin

However, the government has yet to approve it, despite Musk claiming that Tesla had received regulatory approval for all 18 markets which received the update.

Musk has also warned drivers that Tesla’s hands-free mode does not render the vehicles autonomous – and that drivers should still use both hands when driving as this mode cannot recognise traffic cones and does not work well with faded lane markings.

In Hong Kong, Tesla is a popular choice among electric car owners. The city has the highest density of superchargers in the world, meaning that most Tesla owners are within a 20-minute drive of one.