In 2021, government regulations become stronger in many parts of the world. The once idea of free movement and free trade is clouded by regulations and disputes.
There is one company that achieved tremendous success in 2020 and is getting amazing results in 2021, and that is no other than Tesla!
According to Bloomberg, Tesla not only managed to have a cake, but eat it as well.
Many other companies are not doing so well during this pandemic. Companies like Volkswagen which has a lot of resources and government support.
Chinese government is famous by its over the top bureaucracy, where government regulations are the strongest.
They had imposed the rule that foreign companies must create a joint venture with 50 to 50 percent stake in the operations.
This will ensure that the Chinese companies will use the technologies and all the other intellectual properties in the future.
What made the Tesla situation so favorable?
The answer is more complex that this analysis will go through. The key points are technology shift and government disputes.
As we all know, China and the USA are in a trade war for over 4 years now. On top of that add the Corona virus epidemics, the fear of lost jobs and the fear that many companies will eventually move away from China and find a safe production heaven in India and Taiwan.
Once the mantra that the world can’t live without China is broken, then the government will give more rights to foreign companies to attract business again.
After all, “made in China” is not only a business, its politics!
The other reason Tesla made it big in China is that the current politics of the government favored electric cars. China has a plan to dominate the market, so having such a huge name like Tesla making business in the country is a great publicity.
What benefits Tesla gain from China?
This political turmoil gave Tesla the chance to open a factory in the second biggest economy, which is fully owned. No 50 – 50 joint venture or the risk that the Chinese will steal the intellectual property. This was also a huge accusation by the Trump administration.
Tesla has another favorable card. The local government provided to Tesla a fast construction work and completion of the factory and easy access to works where other competitors struggled to continue their operations at a full capacity.
This is important to be noted, because even with the best factory in place, Tesla won’t be able to deliver the promised car models without workers and approved factory facility.
The third benefit is the subsidies cars. The Chinese government famous by its stronger regulations becomes the key to sell the expensive cars to the local market. By providing generous subsidies, Tesla is able to sell their cars to the local market for the friction of the cost. Otherwise, the strong local brands would have killed the competition in no time.
Tesla and Elon Musk follow their vision for a future with electrical cars. This idea, once resisted by the biggest automobile makers in the world, now becomes a reality and common knowledge. China is a big piece of the puzzle with a large population and still a lot of reach to Europe, Asia and other markets.
The idea to set a factory there and do business made Elon Musk the richest man in the world.
Will this love relationship last? Only the time will tell.
Until, time and economic situation change again, Tesla will dominate the world of electric cars at least for 2021!
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