The construction of the Shanghai Gigafactory opens up Asia for Tesla
Asia: The Next Mega Market For Tesla
The Tesla Gigafactory has been constructed at an incredible pace in Shanghai, China. This has surprised many. Tesla has also begun construction on the second building. Tesla expects 150,000 Model 3s to be produced from the factory next year. But why is the Asian market so important to Elon Musk & co.
Early in September, Musk visited China and had meetings with top-level officials in the government. In China, without government approval, your company will most likely fail. Musk managed to secure at 10% tax exemption for his company that extends to everything from cars to other products.
Musk and Tesla have gone all-in on Asia. The construction of the Gigafactory in Shanghai will open up most of the markets in Asia. The Chinese Association of Automobile manufacturers expect EV sales in China to hit 1.6m units With sales of ICE vehicles dwindling slowly and surely, this leaves room for further 26m units in China alone. Tesla has set its eyes further to include Greater China which has Hong Kong, Macau, and Taiwan.
Bar China, Asia has 6 other countries that make the top 20 markets for vehicles in the world. They all sell at least 1 million units per year. These include Japan(3rd) with 5.2m units, India (5th) with 3.3m units, South Korea (12th) with1.5m units sold. Australia (15th) selling 1.1m units, Indonesia (16th) and Thailand (17th) are the others.
There are three things that will affect the success of Tesla: The size of the market, government policies and inventions and the relative costs of electricity and petrol.
Japan is the world’s 4th largest market of Electric vehicles (257,363) just edging out Norway. The cost of electricity is high, but so is fuel. There was excitement when Tesla started selling its cars there, The South Korean government has good incentives for electric vehicles that can extend up to 20m WON which is about $16,600. The Model 3 is sold at 32m WON (22,500). Electricity is cheap in South Korea while petrol remains expensive.
In Hong Kong, Tesla has 24 charging states and 130 stalls. There are 11,500 electric vehicles, of which have are believed to be Model S and Y. In India, the government announced a plan to sell only EVs by the year 2030. It later changed these ambitions to selling 30% EVs by 2030. India has two major problems that will force people to adopt electric cars. The country has a major pollution problem and faces huge oil imports.