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Seems like Tesla has been eying this move for over a year. Bloomberg [0] broke this story last year (June 2016) saying Tesla planned to invest $9 billion in Sha

Seems like Tesla has been eying this move for over a year. Bloomberg [0] broke this story last year (June 2016) saying Tesla planned to invest $9 billion in Shanghai, according to a 'person with knowledge of the matter'. However, one key point from last year's article is: Manufacturing in China would allow Palo Alto, Calif.-based Tesla to avoid a 25% import levy, making its electric vehicles more competitive against luxury-brand rivals, such as BMW and Audi, as well as local offerings by BYD and BAIC. Last year, it sounded like Tesla's motivation to manufacture in China was to avoid this tariff. Now today's WSJ story says Tesla is still likely to pay the 25% tariff. Sounds like Tesla got shafted by Chinese protectionism. [0] Non-paywalled Bloomberg article http://www.industryweek.com/competitiveness/shanghai-said-be-front-runner-tesla-china-production-site http://www.industryweek.com/competitiveness/shanghai-said-be...

rasz 9y ago
Its either 25% import tax, or 50% profit. Chinese are really smart about protecting their own economy.
- Jgrubb 9y ago
  I personally think it’ll be another 30-50 years before it’s clear whether it’s actually smart or not.
  - mistermann 9y ago
    My guess is it should be obvious much sooner, 20 years or so.
  - natural219 9y ago
    It seems abundantly clear at this point that China's economy is vastly "smarter" than ours, in terms of aligning productive resources to where the country needs them most.
    - SimbaOnSteroids 9y ago
      At what cost though.
    - logicchains 9y ago
      Is that why China still has hundreds of millions of extremely poor subsistence farmers? Not all of China is Beijing/Shanghai/Shenzhen.
      - LoSboccacc 9y ago
        partly yes, it's managing strategically their move to the city/middle class to a) avoid starvation and b) keeping an healthy supply of fresh internal market not that I condone the various atrocities and general suffering happening there, but yes from the economical point of view that's why and that also makes sense, as cruel as it might be. you simply cannot "industrial revoluzionize" a country that big as England did in the 1800. they maybe can do more and faster, but that's very hard to model.
        jernfrost 9y ago
        Sure you can and they are are much faster rate. England had growthof 1.3% during the industrial recolution. That was rapid growth back then. China has been doing 10% for many years. So what England did is not impressive by todays standard. Event the most backwards developing countries today can achieve that growth rate.
        LoSboccacc 9y ago
        gdp growth != rate of urbanization
      - natural219 9y ago
        Are you asking "why hasn't a country lifted a billion people out of poverty overnight?", or, "why have they only lifted 500 million people out of poverty in 30 short years?"
      - 9y ago
  - l5870uoo9y 9y ago
    Is that 50 years on top of ~40 years with stagnant wages? I don't think there is time for that. > Real wages in the United States, have stagnated since the mid-1970s contrary to expectations that real wages should raise in line with increases in productivity. Between 1973 and 2013 productivity in the United States grew by 74% whilst compensation for workers grew by 9% in the same period. The stagnation of real hourly wages has resulted in a Middle-class squeeze as increases in inflation and the cost of living exceeds the growth of real wages for members of the middle and lower classes.
    - twoodfin 9y ago
      This assertion doesn't pass the smell test, unless you believe that the median working-age US household by income had a worse standard of living in 2013 than it did in 1973. In reality, the distribution of employment income has shifted from cash wages to expanded benefits. There has been substantial growth in two-earner households which indeed puts downward pressure on individual wages but increases household income and wealth. Productivity gains have resulted in much cheaper goods in a variety of sectors, leading to a couple of decades of historically low inflation. We've also had big demographic shifts in immigration and aging over 40 years that make point-to-point comparisons potentially misleading.
      - _Tev 9y ago
        > This assertion doesn't pass the smell test, unless you believe that the median working-age US household by income had a worse standard of living in 2013 than it did in 1973. Actually you are the first one I see to dispute this. Do you base these smell tests/beliefs in any public data? I would like to see the source to have something to dispute this frequently stated claim.
        twoodfin 9y ago
        Let me reverse this: What do you think was better about life for the median working-age US household in 1973? Their house was smaller. Their car was less safe, less reliable and guzzled gas. They had no internet, no mobile phones and only 3 television networks. Eating at a restaurant was a monthly indulgence at best. Air travel was a luxury. Their children could expect to have seven fewer years of life, and were markedly less likely to go to college. Think about how much someone would have to pay you to live a 1973 lifestyle, and it should be obvious why claiming there have been 40 years of “stagnation” is nonsense.
- KKKKkkkk1 9y ago
  Why is it dangerous to allow the Chinese people to buy Tesla cars at market price?
  - averagewall 9y ago
    To protect their local EV industry, no doubt, which they apparently want to protect because: "China is encouraging and supporting the development of alternative energy options, especially in terms of electric-vehicle development, because they anticipate the rise of new fuel technologies and greater fuel efficiency will give them greater energy independence." [1] [1] https://en.wikipedia.org/wiki/Electric_vehicle_industry_in_China https://en.wikipedia.org/wiki/Electric_vehicle_industry_in_C...
- ksk 9y ago
  >Chinese are really smart about protecting their own economy. So is the West. Ironically, the USA was one of the most protected economies around the second world war. And GB before that.
seanmcdirmid 9y ago
All SEZs (special export zones) are set up like this: they are in China, but technically outside of China for import purposes. So that iPhone that is "made in China" is actually more expensive because it is made in an SEZ and must be imported into China. Actually going in China would require a JV (joint venture), which would likely siphon off a lot of IP that Tesla wants protected, let alone profits. China is not the champion of free trade that they pretend to be.
- KGIII 9y ago
  Tesla will let you use their patents for free. They will let anyone use them, even direct competitors. There is no charge. Any other IP could just be reverse engineered, for the most part. https://www.wired.com/2014/06/tesla-just-gave-all-its-patents-away-to-competitors/ https://www.wired.com/2014/06/tesla-just-gave-all-its-patent...
  - deleted 9y ago
    [deleted]
  - smitherfield 9y ago
    They don't as of yet, at least not in any real sense. [1]: > Around the three-minute mark someone asks how many automakers have taken Tesla up on the offer to use its patents, and Musk notes: >>> Musk: We actually don't require any formal discussions. So they can just go ahead and use them. >>> Reporter: Is there a licensing process? >>> Musk: No. You just use them. Which I think is better because then we don't need to get into any kind of discussions or whatever. So we don't know. I think you'll see it in the cars that come out, should they choose to use them. Sounds nice, but no legal department on Earth is ever going to approve of deliberately using another company's patents without an explicit licensing agreement, no matter what non-legally-binding statements that company's CEO has made. As a sophisticated businessman, Musk is well aware of this fact. [1] https://www.techdirt.com/articles/20150217/06182930052/elon-musk-clarifies-that-teslas-patents-really-are-free-investor-absolutely-freaks-out.shtml https://www.techdirt.com/articles/20150217/06182930052/elon-...
    - 9y ago
njarboe 9y ago
I thought China was part of the WTO and has most favored nation trade status with the US. Does the US have such high import taxes on Chinese goods? I don't think so. Googling around I found this[1] 2014 article about unfair taxes on US cars and a win for the US in the WTO court, but maybe China just ignores that ruling. It does not seem reasonable for the US to allow China to impose taxes and force tech transfer from the US, especially since the US has such a high trade deficit with China. There was some talk about this problem during the US election, but I have not seen any action on the issue yet. [1] http://www.latimes.com/business/la-fi-wto-autos-china-20140524-story.html http://www.latimes.com/business/la-fi-wto-autos-china-201405...
- sandworm101 9y ago
  Cars are a special thing in US trade deals. Free trade or not, the US auto industry gets special protections. This is also true of other countries (Canada, Europe etc) but is most true of the US.
- fspeech 9y ago
  The ruling was about anti-dumping taxes that China imposed as a retaliation for US imposing anti-dumping tax on Chinese tires. Anti-dumping tax is in addition to regular tariffs. Since China lost the case I assume these anti-dumping taxes were abolished.
- makomk 9y ago
  As I understand it, most favoured nation status just means that China has to charge the same tariffs on imports from the US that they charge when importing equivalent items from other countries which they don't have trade deals with. (Which probably rules out most kinds of tit-for-tat tariff policies.)
- ksk 9y ago
  I think your comment needs a historical perspective. Protectionism and tariffs played an important economic part in the rise of all of the current world superpowers. Pretty much everyone from the USA, to GB to Sweden practiced heavy protectionism through tariffs and subsidies (which also featured in the civil war). While you can pick any window in history and adjudicate whats "fair", the alternative to "Chinese are sneaky" is that they're simply doing what others did before them to become dominant.
azureel 9y ago
Another non paywalled archive: http://archive.is/nRchr http://archive.is/nRchr

rasz 9y ago

Its either 25% import tax, or 50% profit. Chinese are really smart about protecting their own economy.

Jgrubb 9y ago
I personally think it’ll be another 30-50 years before it’s clear whether it’s actually smart or not.
- mistermann 9y ago
  My guess is it should be obvious much sooner, 20 years or so.
- natural219 9y ago
  It seems abundantly clear at this point that China's economy is vastly "smarter" than ours, in terms of aligning productive resources to where the country needs them most.
  - SimbaOnSteroids 9y ago
    At what cost though.
  - logicchains 9y ago
    Is that why China still has hundreds of millions of extremely poor subsistence farmers? Not all of China is Beijing/Shanghai/Shenzhen.
    - LoSboccacc 9y ago
      partly yes, it's managing strategically their move to the city/middle class to a) avoid starvation and b) keeping an healthy supply of fresh internal market not that I condone the various atrocities and general suffering happening there, but yes from the economical point of view that's why and that also makes sense, as cruel as it might be. you simply cannot "industrial revoluzionize" a country that big as England did in the 1800. they maybe can do more and faster, but that's very hard to model.
      - jernfrost 9y ago
        Sure you can and they are are much faster rate. England had growthof 1.3% during the industrial recolution. That was rapid growth back then. China has been doing 10% for many years. So what England did is not impressive by todays standard. Event the most backwards developing countries today can achieve that growth rate.
        LoSboccacc 9y ago
        gdp growth != rate of urbanization
    - natural219 9y ago
      Are you asking "why hasn't a country lifted a billion people out of poverty overnight?", or, "why have they only lifted 500 million people out of poverty in 30 short years?"
    - 9y ago
- l5870uoo9y 9y ago
  Is that 50 years on top of ~40 years with stagnant wages? I don't think there is time for that. > Real wages in the United States, have stagnated since the mid-1970s contrary to expectations that real wages should raise in line with increases in productivity. Between 1973 and 2013 productivity in the United States grew by 74% whilst compensation for workers grew by 9% in the same period. The stagnation of real hourly wages has resulted in a Middle-class squeeze as increases in inflation and the cost of living exceeds the growth of real wages for members of the middle and lower classes.
  - twoodfin 9y ago
    This assertion doesn't pass the smell test, unless you believe that the median working-age US household by income had a worse standard of living in 2013 than it did in 1973. In reality, the distribution of employment income has shifted from cash wages to expanded benefits. There has been substantial growth in two-earner households which indeed puts downward pressure on individual wages but increases household income and wealth. Productivity gains have resulted in much cheaper goods in a variety of sectors, leading to a couple of decades of historically low inflation. We've also had big demographic shifts in immigration and aging over 40 years that make point-to-point comparisons potentially misleading.
    - _Tev 9y ago
      > This assertion doesn't pass the smell test, unless you believe that the median working-age US household by income had a worse standard of living in 2013 than it did in 1973. Actually you are the first one I see to dispute this. Do you base these smell tests/beliefs in any public data? I would like to see the source to have something to dispute this frequently stated claim.
      - twoodfin 9y ago
        Let me reverse this: What do you think was better about life for the median working-age US household in 1973? Their house was smaller. Their car was less safe, less reliable and guzzled gas. They had no internet, no mobile phones and only 3 television networks. Eating at a restaurant was a monthly indulgence at best. Air travel was a luxury. Their children could expect to have seven fewer years of life, and were markedly less likely to go to college. Think about how much someone would have to pay you to live a 1973 lifestyle, and it should be obvious why claiming there have been 40 years of “stagnation” is nonsense.
KKKKkkkk1 9y ago
Why is it dangerous to allow the Chinese people to buy Tesla cars at market price?
- averagewall 9y ago
  To protect their local EV industry, no doubt, which they apparently want to protect because: "China is encouraging and supporting the development of alternative energy options, especially in terms of electric-vehicle development, because they anticipate the rise of new fuel technologies and greater fuel efficiency will give them greater energy independence." [1] [1] https://en.wikipedia.org/wiki/Electric_vehicle_industry_in_China https://en.wikipedia.org/wiki/Electric_vehicle_industry_in_C...
ksk 9y ago
>Chinese are really smart about protecting their own economy. So is the West. Ironically, the USA was one of the most protected economies around the second world war. And GB before that.

seanmcdirmid 9y ago

All SEZs (special export zones) are set up like this: they are in China, but technically outside of China for import purposes. So that iPhone that is "made in China" is actually more expensive because it is made in an SEZ and must be imported into China. Actually going in China would require a JV (joint venture), which would likely siphon off a lot of IP that Tesla wants protected, let alone profits. China is not the champion of free trade that they pretend to be.

KGIII 9y ago
Tesla will let you use their patents for free. They will let anyone use them, even direct competitors. There is no charge. Any other IP could just be reverse engineered, for the most part. https://www.wired.com/2014/06/tesla-just-gave-all-its-patents-away-to-competitors/ https://www.wired.com/2014/06/tesla-just-gave-all-its-patent...
- deleted 9y ago
  [deleted]
- smitherfield 9y ago
  They don't as of yet, at least not in any real sense. [1]: > Around the three-minute mark someone asks how many automakers have taken Tesla up on the offer to use its patents, and Musk notes: >>> Musk: We actually don't require any formal discussions. So they can just go ahead and use them. >>> Reporter: Is there a licensing process? >>> Musk: No. You just use them. Which I think is better because then we don't need to get into any kind of discussions or whatever. So we don't know. I think you'll see it in the cars that come out, should they choose to use them. Sounds nice, but no legal department on Earth is ever going to approve of deliberately using another company's patents without an explicit licensing agreement, no matter what non-legally-binding statements that company's CEO has made. As a sophisticated businessman, Musk is well aware of this fact. [1] https://www.techdirt.com/articles/20150217/06182930052/elon-musk-clarifies-that-teslas-patents-really-are-free-investor-absolutely-freaks-out.shtml https://www.techdirt.com/articles/20150217/06182930052/elon-...
  - 9y ago

njarboe 9y ago

I thought China was part of the WTO and has most favored nation trade status with the US. Does the US have such high import taxes on Chinese goods? I don't think so. Googling around I found this[1] 2014 article about unfair taxes on US cars and a win for the US in the WTO court, but maybe China just ignores that ruling. It does not seem reasonable for the US to allow China to impose taxes and force tech transfer from the US, especially since the US has such a high trade deficit with China. There was some talk about this problem during the US election, but I have not seen any action on the issue yet. [1] http://www.latimes.com/business/la-fi-wto-autos-china-20140524-story.html http://www.latimes.com/business/la-fi-wto-autos-china-201405...

sandworm101 9y ago
Cars are a special thing in US trade deals. Free trade or not, the US auto industry gets special protections. This is also true of other countries (Canada, Europe etc) but is most true of the US.
fspeech 9y ago
The ruling was about anti-dumping taxes that China imposed as a retaliation for US imposing anti-dumping tax on Chinese tires. Anti-dumping tax is in addition to regular tariffs. Since China lost the case I assume these anti-dumping taxes were abolished.
makomk 9y ago
As I understand it, most favoured nation status just means that China has to charge the same tariffs on imports from the US that they charge when importing equivalent items from other countries which they don't have trade deals with. (Which probably rules out most kinds of tit-for-tat tariff policies.)
ksk 9y ago
I think your comment needs a historical perspective. Protectionism and tariffs played an important economic part in the rise of all of the current world superpowers. Pretty much everyone from the USA, to GB to Sweden practiced heavy protectionism through tariffs and subsidies (which also featured in the civil war). While you can pick any window in history and adjudicate whats "fair", the alternative to "Chinese are sneaky" is that they're simply doing what others did before them to become dominant.

azureel 9y ago

Another non paywalled archive: http://archive.is/nRchr http://archive.is/nRchr