In a significant development, Tesla is intensifying its collaboration with China as it continues to navigate the thriving New Energy Vehicle (NEV) market in the region. The electric vehicle manufacturer is poised to commence the construction of a state-of-the-art Megapack factory, while over 95% of its supply chain is now located within China.
China has emerged as a formidable force in the NEV market, with consistent growth and innovation. Tesla, in partnership with the Chinese government, has played a pivotal role in shaping this dynamic landscape. Allan Wang, President of Tesla China, expressed enthusiasm about the ongoing collaboration, emphasizing the company's commitment to further development within China.
Wang commented during the China International Fair For Trade in Services held in Beijing, stating, “The Chinese NEV market is growing fast and on a large scale, and almost all automakers in China are talking about their NEV business when it comes to their future development strategies.” He underscored the importance of embracing NEVs, noting that “Automakers that don't follow NEV's lead will be eliminated.”
Furthermore, Wang highlighted the increasing involvement of overseas car manufacturers with Chinese NEV and battery makers. He emphasized that traditional automakers must foster partnerships and gain support from Chinese supply chain entities to make a meaningful impact in the domestic NEV market.
Wang elaborated, stating, “More than 95 percent of the parts Tesla uses to build vehicles at its Shanghai plant come from Chinese suppliers.” Tesla's Shanghai plant has entered agreements with approximately 360 domestic first-tier suppliers, with around 60 of them subsequently venturing into the international market and receiving recognition from foreign automakers.
The symbiotic relationship between Tesla and its Chinese supply chain partners is fueling growth in the NEV sector. Wang elucidated, “Chinese firms involved in Tesla's supply chain are growing with Tesla because NEV's core R&D includes many segments, from ideation to assembly.” These Chinese companies are poised to supply their products to more Chinese NEV manufacturers, fostering a collaborative ecosystem.
In addition to these developments, Wang disclosed that Tesla is on the cusp of commencing construction on the Shanghai Megapack battery plant. He revealed that a significant portion of the Megapack factory's output is destined for export markets, further solidifying Tesla's footprint in the global NEV arena.