Tesla Model 3 Will be a Positive Catalyst for China, Says Local EV Maker

Tesla will be a positive catalyst towards the development of China’s EV market, said a senior executive from local electric vehicle start-up Xpeng Motors. China has ambitious goals for the EV market this coming 2020. The Model 3 from Gigafactory 3 could help the country reach its goals if Xpeng Motors’ executive’s assumption is correct. 

“I think Tesla coming to China will be a positive catalyst for the EV market. I always believe that having a good product that really gets the consumer interested and expands the overall market is good for the industry,” said Xpeng Motors President Brian Gu to CNBC. 

Gigafactory 3 just received its mass production license, allowing it to ramp Model 3 production. Deliveries are expected to start soon. Analysts in China Securities believe the made-in-China Model 3 will be a top choice for consumers looking to buy luxury EVs. 

Sources from China’s Ministry of Industry and Information Technology suggest that the government has future plans to increase EV sales significantly, until 60 percent of cars sold in the country are electric by 2035, reported Automotive News. The people who spoke with the news outlet did not want to be named because the information had not been made public or set in motion yet. 

Currently, China’s goal is to make EVs command 20 percent of the country’s auto market by 2025. The new plan will add an additional 40 percent to the Chinese government’s goal and give the country more time, too, specifically until 2035. China's overall goal is to completely phase out fossil-fueled cars in the country at some point in the near future.

Made in China 🇨🇳Tesla Model 3~~

‼️ In Da House(s) ‼️

MIC #Model3 started to arrive different #Tesla showrooms in different cities of #China $TSLA pic.twitter.com/yySE5d0QFZ

— Vincent (@vincent13031925) November 20, 2019

To meet its ambitious goals, China will have to reinvigorate its EV market. Electric vehicle sales have slumped a bit since the government started reducing the subsidies offered to EV consumers, which could affect the future of small businesses just entering the sustainable auto industry. 

Xpeng Motors is a China-based EV start-up, which has plans to ramp production of new vehicles. It recently raised US$400 million from investors for the ramp. Gu’s statement to CNBC suggests that he believes that Tesla will ignite—or reignite—interest in electric vehicles in China. 

If more people are interested in sustainable cars, then the EV market will grow. And not all people interested in EV’s will be looking for luxury models. As such, a larger market means bigger slices for each competing EV automaker. For example, Xpeng Motors’ new models are not at the same price points as Tesla’s vehicles, so it will benefit from increased interest in sustainable cars and a more developed EV market. Tesla’s lower-priced vehicles, the Model 3 sedan and Model Y crossover, are also expected to cause some disruption in the Chinese EV segment. 

Featured Image Credit: Tesla China