Tesla Troubles in China

Elon Musk

Tesla is clearly the market leader in the electric vehicle sector. It is the pioneer of electric cars. The company currently has a market value of more than $600 billion, plunged from $800 billion in a month. However, according to the asset-management company, Tesla is expected to reach $4 Trillion in market value by 2030.

It is quite safe to say it will be leading the next era of the automobile industry revolution.

 

However, Tesla took a bump this week when it received a ban in China, raising concerns. The Chinese government has reportedly banned its government officials from using Tesla cars, specifically the military, citing concerns about security and privacy. According to reports, the Chinese military has objected to the cameras installed in the Tesla cars. The cameras in the Tesla car are used to assist the drivers with parking, self-driving, and driver safety.

Tesla

The military has complained the cameras breach the privacy of their premises and could bring unwanted troubles such as spying in the territory.

Elon Musk has responded to the criticism with a blast in a Chinese virtual discussion forum. He has said that his company would be shut down if its cars were used for spying in China or anywhere else. Musk said ‘There’s a very strong incentive for us to be confidential with any information. He claimed, Tesla will never share its user information with any institutions in the US.

The incentive is very well known. China contributes to 30% of Tesla’s sale and it is very important to market for the electric vehicles due its growth and size.

This isn’t the only concern that may trouble Tesla in China. Increasing competition in the Chinese market for electric cars can be an issue too. Some users in China are opting for local brands due to multiple reasons such as price competition, driving range concerns, and government incentives.

The cheap local brands are attracting buyers in China. While the driving range – car’s ability to complete trip while heating - a concern in the colder parts of the country is an issue too. The government initiatives and subsidies to support the home-made brands are also increasing competition.

While Tesla will keep the crown of the market in the segment, the future, however, might not be that smooth. With more and more established automobile companies joining the sector, the competition will be tougher. The big boys like Volvo and Volkswagen have already declared that they are bringing electric cars to the market, and they will convert to electric within the next decade.

The race for the crown will be interesting to watch.