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Tesla Motors Withdraws Plan to Create Manufacturing Plant in China

By | May 21, 2016 10:17 AM EDT
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Telsa Motors in China.

Telsa Motors has said it has no plans to put a manufacturing plant in China unless demand reaches a "critical mass."(Photo : Getty Images)

Despite the impressive success of the Tesla 3 in China, Tesla Motors is still hesitant to set-up a production unit in the world's second-largest economy. China recorded the largest pre-orders for the Tesla 3 outside of the United States.

Putting a factory in China would make sense only after demand in the Chinese market reaches a "critical mass", JB Straubel, Telsa's co-founder, said on Thursday.  Straubel was speaking on the sidelines of International Transport Forum (ITF) 2016 in Germany.   

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Straubel's remark has more or less ended speculations that Tesla Motors may build an assembly line in China. The rumors became rife after Jon McNeill, Tesla's president of global sales, in a recent interview, described China as one of the potential candidates for setting up Tesla's manufacturing plant.

The manufacturing plant was supposed to meet the rising demand of the newly launched Tesla 3 model.

China is an immensely important market for Telsa Motors, which is the world's leading electric car manufacturer. Last year, China emerged as the second largest market for the electric car maker.

Despite the ongoing economic slowdown, Telsa and other global car manufacturers are pinning their hopes on China to revive their fortune.

Some leading car manufacturers like General Motors and Jaguar Land Rover have managed to buck the economic gloom by registering impressive sales and revenue in world's largest car market.

However, competing in the world's largest car market is proving to be a herculean task for most global car manufacturers. The 'price sensitivity mindset' of Chinese customers and increasing competition is posing great challenge to car manufacturers.

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