By on March 13, 2018

Tesla Model S Grey - Image: Tesla

Earlier this month, Tesla Motors CEO Elon Musk called into question the fairness of China’s automotive trade practice via a handful of tweets to President Donald Trump.

“Do you think the US [and] China should have equal [and] fair rules for cars? Meaning, same import duties, ownership constraints [and] other factors,” Musk asked. “For example, an American car going to China pays 25 [percent] import duty, but a Chinese car coming to the US only pays 2.5 [percent], a tenfold difference.”

While Trump used Musk’s Twitter outburst as proof of China’s trade imbalance with the United States, the media began to wonder if the Tesla CEO was having an unpleasant time negotiating with the nation. In 2017, the automaker appeared to be on the cusp of a deal to build a factory in Shanghai — allowing it to cut costs within the region by a third. Fortunately for the brand, Musk’s trade concerns haven’t derailed progress. The Shanghai government has confirmed its talks with Tesla are progressing well. 

“Both sides will keep looking thoroughly at plans in China. Currently the details are still under discussion, once anything is confirmed we will announce it as quickly as possible,” Chinese officials said in statement to Reuters. “As Tesla CEO Elon Musk has said openly before, Tesla attaches great importance to its development and plans in China.”

Shanghai expressed the importance of shared electrification goals but made no direct reference to Musk’s issues with China’s trading policies. There’s also no news of which company Tesla will enter into a joint venture with in order to produce cars within the country. China requires foreign automakers to partner with established domestic firms if they want to assemble cars there — a matter, along with the tariffs, Elon Musk doesn’t seem particularly fond of.

“The current rules make things very difficult. It’s like competing in an Olympic race wearing lead shoes,” Musk wrote. “China has already shown a willingness to open their markets and I believe they will do the right thing [in the end].”

[Image: Tesla Motors]

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11 Comments on “Tesla Talks on Track, China Says, Despite Musk’s Trade Rant...”

  • avatar

    I’d like to see Trump tackle this. It’s completely unfair that the Chinese put import duty on cars in this way.

  • avatar

    Maybe EM could camp out on one of the Chinese government offices, cook some hot dogs, and cut through the “production hell” that is China.

  • avatar
    Big Al from Oz

    Musk is right here. But I also think he sees the writing on the wall for Chinese EVs in the future.

    I also see many disregarding the non tariff barriers.

    So, Trump might end up being the one through his actions getting the Chicken Tax removed. You’ll be able to have $20k 4×4, fully blinged, crew cab pickups in diesel.

  • avatar

    “but a Chinese car coming to the US only pays 2.5 [percent], a tenfold difference.”

    It might as well be infinity %. The number doesn’t really matter, are there even any Chinese cars for sale in the US? Volvo is Chinese owned, are they built there and brought here?

  • avatar

    tariffs are NOT a question of what is cheapest for the US buying public. I got sick fast of the stories last weeken about how a 6 pack of beer will cost 6 cents more.

    Tariffs and trade rules should be about what is RIGHT and FAIR.

    Is it right and fair that a US car going into China for sale is taxed 25% and China car coming into the US have a 2.5%. Come on. Obviously NO. Even a 7 year old can figure that one out.

    And if you peel back a layer or 2, you ll see all kinds of unfair issues that help the sale of off shore goods and hurts the out put of american workers.

    So, more US plants close and that job you can support a family with is gone. We lose.

    And the bottom level jobs are crushed and killed money wise when you have 10 illegals fighting over 1 job. What happens then>? Wages crater.

    Those are not jobs american wont do. Those are jobs AMERICANS WONT DO AT THAT CRUSHED / CRATERED PAY LEVEL.

    • 0 avatar

      It’s even more profound than fairness and moral turpitude. National security and geopolitics are also at the center of these new trade initiatives.

      It’s no secret that the Chinese are trying to capture US intellectual property and manufacturing for the purposes of compromising security. It’s already somewhat worrisome that most electronics are manufactured in China and we have no idea what their true operational capabilities are in terms of transmission of data and metadata. I suspect this is the reason Apple is going to manufacture phones in the US, and part of the reason they switched back to Samsung chipsets. Businesses and government will probably be the biggest consumers of American-made iPhones, regardless of their cost.

      The same issues exist in every industry. The Keystone XL pipeline was about national security, though it is unclear precisely what role it plays. On the one hand, it keeps Canadian oil from refiners in the Gulf of Mexico, which helps Venezuela. What is unclear is whether Obama was helping Venezuela to keep them away from the Russians or whether he was doing it to help Russia. Very hard to tell in the Clinton/Obama era what was meant to be a stick and what was meant to be a carrot. Also hard to tell who they were trying to punish. Seems like they hated America and Russia equally.

    • 0 avatar

      I’d like to see a one-for-one policy for trade with China, nothing more, nothing less. Same tariffs, same demand to partner with a host-nation company, same demand to turn over all technological know-how. But the world is afraid of China’s economic impact (and I count the US in on that). We’ve decided that price (not cost…different animal) is king. While shelf price is one thing, the true cost impact to our national wealth, security, international standing and (potentially even) sovereignty is not taking into consideration. While China preaches “fair trade” and open markets, it only swings one way for them. Again, not saying we should go above and beyond what they slap on our products going in, but we should level the playing field and provide the same “benefits” to a Chinese company wanting to either sell product or manufacture in our country.

      But that ain’t gonna happen…

  • avatar

    China knows that gutting the US economy is bad business. They should have pivoted to focus on domestic production long ago, but something going on in China has been pushing them towards mutually assured destruction.

    Not sure how this will play out in the grand scheme, but hopefully China is ready for both of us to prosper, not just the American capitalist class and the Chinese labor bureaucracy.

  • avatar

    GM and Ford along with every other Western auto maker has happily been manufacturing vehicles in China for years under the joint venture scheme. Presumably they do it to make money, or they would have left already. 50% of a great fat pile of loot is still a pretty big fat pile. Knowing the proclivities of businessmen, they aren’t in the least bit bothered whether China “steals” their “intellectual property”, so long as the quarterly reports are good. GM happily exports Chinese Buick Envisions and Cadillacs back to the US with an apparently clear conscience. Geely, who owns Volvo exports the S90 and the S60L worldwide.

    Making a car isn’t rocket science unless you’re Tesla struggling away, so precious little is being “lost” anyway.

    Back in the early ’80s Reagan threatened high import duties on Japanese cars. So Honda, Toyota and Nissan built factories in the US. No JV rules, but the US was a highly developed country, unlike the China of 25 years ago.

    Musk has moaned about the car dealer franchise system in the US which has prevented him opening factory Tesla stores in many places. Those franchised dealer interests have stymied his grand plans and are in no mood to change their version of the gravy train. Now he moans about China’s import duties instead of opening up a JV there like everyone else. An EV is about as technological as a bread-slicing machine – electric cars were common well over a hundred years ago, before bread slicers were invented in fact. And China has literally dozens and dozens of local EV companies already. What’s to steal from Tesla? Autopilot? That works so well.

    As for Geely, their new SC factory soon due to be opened was intended to make Volvo S60s for the entire world. But the recent bellicosity with regard to steel and aluminum impfforts have given them pause to reconsider from what I’ve read, although the connection is tenuous to me. It’s likely that Geely has noted BMW has received zero “credit” for making all its X models in the US for the world market (now about to change), and wonders if the investment and effort is worthwhile.

    A trip to Walmart or a trawl through Amazon shows that China has the world by the short and curlies on plastic garbage cans and clothes and electronics. There’s where the real trade imbalance lies, surely?

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