Electric vehiclesEnergy

Tesla serves as a Catfish in China and changes car makers into Sharks

Liu Siong Song created machinery 42 years ago to assist industries in producing low-cost toys and watches. After that, he created them for motorcycle manufacturers. Now he assists Tesla in “making full-size vehicles in the very same way that the toy cars are manufactured,” as Elon Musk puts it.

In some ways, Mr. Liu, 69, has come full circle, but he may also play a part in the evolution of driving. In the emerging electric automobile market, his firm is among the emerging Chinese manufacturers battling aggressively and competently with conventional competitors from the United States, Europe and Japan, and Japan.

Electric automobiles have the potential to disrupt the auto industry, as well as jobs, technology, and geopolitical impact. Consider how companies like GM and Volkswagen have provided the US and Germany economic power and worldwide prestige.

China is on the verge of becoming a big player in the electric vehicle market, and Tesla and a swarm of other Chinese electric vehicle start-ups are assisting its companies in becoming even more competitive. Tesla’s massive Shanghai factory collaborates with local suppliers to produce increasingly sophisticated components that help the company compete with Western and Japanese automakers.

According to Mr. Liu, the way Tesla builds cars has put “a lot of pressure on established automakers.” “They’ve all understood the gravity of the problem and are making the switch to alternative fuel cars.” The Biden administration’s effort for sustainable energy and restoring American industry is centered on electric vehicles. However, similar to how Apple did with devices, Tesla is strengthening relations with China in order to gain access to both its skilled manufacturing supply chain and large market of automobile customers.

“In the automobile race, China is overtaking its opponents by switching lanes,” said Patrick Cheng, CEO of NavInfo, a Beijing-based mapping as well as autonomous driving technology company. “Previously, the race was only for cars with internal combustion engines. Now it’s the turn of the electric vehicles.”

In the Chinese auto business, the term “overtaking” is frequently used. Many of its engineers and executives feel that the move to new energy vehicles gives a comparable opportunity to the rise of mobile internet within the last decade when Chinese companies developed powerful platforms like WeChat, a mobile messaging app, and TikTok, a short video app.

That is why the Chinese administration has warmly welcomed Tesla. It has provided Mr. Musk’s firm with low-cost land, loans, tax breaks, and subsidies. It also permitted Tesla to operate its factory in China without the involvement of a local partner, a milestone for a foreign manufacturer in the country. Beijing is attempting to achieve what is known in the business sector as the catfish effect: throwing a combative fish into a pool to make the existing residents swim faster.

Both parties have benefited from the strategy. Mr. Musk claimed at Tesla’s annual shareholders’ meeting in October that the Shanghai factory, which was completed in less than a year in 2019, had outperformed the company’s Fremont, Calif., plant in terms of production.

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