With more companies jumping into the electric car industry, it is not surprising that Tesla has numerous competitions. This time, however, Chinese electric car manufacturers are going to jump into the fray. Given how affordable these vehicles can be, Tesla might have a major threat on their hands.
Electric Car Industry
Tesla is no stranger to an ever changing climate in its industry. Just recently, there were rumors that Faraday Future could threaten Elon Musk's company after they unveiled their latest creation FF91 during the CES 2017. However, the company's biggest threat could be the locally manufactured electric vehicles in China.
As reported by Reuters, China is the biggest market for electric vehicles. Perhaps owing to Beijing's initiative to promote a greener environment, there is a booming industry for hybrid cars in the country. By 2020, the country would require about 5 million electric vehicles on its roads which could be a good market for Tesla. While these domestic cars are for short-range trips, they are much cheaper than the cars that are under development by Tesla which means that this market may not be too viable for the company. Although these EVs lack the luxurious feel, they are serviceable and economical.
Best of all, these vehicles are readily available to the public since they are not sold at a premium. Government subsidies also keep the costs low, making the finished products more affordable.
Tesla Vs Chinese Car Manufacturers
Given the economies of scale and the government incentives, electric vehicles only cost about $8,000 in China, a far cry from more expensive car models in the U.S. Tesla may be known for quality but these new breed of cars from China are so affordable that it would be easy to buy one. For now, Chinese companies are moving on their home turf but GAC Motor and BYD are interested in a global expansion.
GAC Motor is planning to enter the U.S. market by 2019 while BYD already established a factory in the United States. BYD has already started its global expansion and it is already selling electric buses at South America, Africa, and Europe. Hence, Tesla should be on the lookout for these Chinese competitors in the industry.