Do not write-off Tesla yet; Beijing loves it

While customers were busy cribbing about Tesla’s (TSLA) safety features and investors were chastising CEO Elon Musk for not meeting the delivery deadlines, half the globe away, car-lovers were watching Tesla models with awe as the company made its maiden appearance at the Beijing Motor Show this week.

Hordes of auto-enthusiasts and media persons crowded around a white Model S, a red Model 3 and a blue Model X, turning their backs to media events that were held at the same venue by rivals including Daimler AG and Toyota Motor Corp. Tesla, beyond doubt, has a lot of admirers in the fastest growing electronic vehicle (EV) market in the world.

The biggest challenge facing Tesla in entering this tantalizing market was the tight regulatory laws of the Chinese government that required foreign companies to partner with a local player to avoid hefty import tariffs. But the government has now decided to go lenient on this specific law, with Tesla predicted to be one of the biggest beneficiaries. Musk had been struggling with red tape for over a year to open an assembly plant in Shanghai.

According to the founder of Chinese EV firm WM Motor, Freeman Shen, the whole EV market will benefit from better growth if Tesla sets up a plant in China.

Ionity bond

According to the recent reports, Tesla may soon be joining a network of charging points, called Ionity, which already powers EVs made by Ford (F), BMW, Volkswagen, and Mercedes-Benz. Other manufacturers including Fiat Automobiles (FCAU), Jaguar and Volvo are also planning to join the bandwagon.

Tesla may soon be joining a network of charging points, called Ionity, which already powers EVs made by Ford (F), BMW, Volkswagen, and Mercedes-Benz.

Tesla already has its own Supercharger network, with a huge amount spent on setting up infrastructure in the US, Europe and parts of Asia. At the end of 2017, the company had over 1,000 stations around the world with about 7,500 chargers. Meanwhile, Ionity, which boasts of ultra-fast charging, plans to build thousands of chargers in over 400 locations across Europe by 2020.

At present, Tesla has an enviable line-up of electric vehicles and charging infrastructure. But a better penetrated Ionity network and its faster-charging ability might lure prospective EV customers to opt for other manufacturers in the future. Tesla’s bid to join this network, if the reports are to be believed, would only enable the company maintains its dominant status in the EV market.

At the end of the day, it might not be the home market, but China and Europe that end up saving the  EV pioneer.