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Elon Musk: Tesla eyes China production of Model 3

BEIJING – Tesla Motors plans to produce the Model 3 in China to offset import duties and make it an affordable EV with long range, according to CEO Elon Musk.

Musk made the comments on October 22 at Tsinghua University in Beijing during a dialogue with Qian Yingyi, dean of Tsinghua’s School of Economics and Management (SEM), as part of the annual Tsinghua Management Global Forum.

“Long-term we want to have location production in China because we have quite high import duties and with local production and high volume, the Model 3 would only be a third of what the current car costs in China, and with long range,” said Musk, who recently became a member of the Tsinghua SEM Advisory Committee. The Model 3, according to Musk, is still about two years away and as an imported model will be half of the price of the Model S, which currently sells for about ¥673,000-¥1,027,500 ($105,984-$161,811) in China.

Tesla in fact has been in discussions with relevant authorities and officials about local production and has achieved encouraging results, according to Musk on October 23 at another event in Beijing announcing the version 7.0 software upgrade for Tesla owners in China. The “over the air” (OTA) upgrade allows autopilot features such as automatic lane keeping, automatic lane changing and automatic parking.

Musk predicted at the Tsinghua event that within three years there will be cars that are fully autonomous that you can buy pending regulatory approval. “Technically there is no problem in three years. Some jurisdictions may even make it illegal to have people drive cars,” said Musk.

Musk also projected that by 2030 more than half of all new cars produced in the world will be electric and that China will have the most EVs in the world, a view he already had five years ago.

“China will have a bigger share because China has the capacity and macro industrial output capabilities,” said Musk. “China will also be the leader in the area of EV charging infrastructure.”

Musk believes that there will be many winners in the EV space, not one takes over. “It’s not an industry where there is a natural monopoly. It will be a competitive industry,” said Musk.

He also thinks that charging for EVs, which already is capable of long driving range, is a psychological problem and people getting used to the idea. “People will end up charging their cars where they charge their phones,” said Musk.

Musk hopes that its open patents would help companies in China. “We are doing our best to help others in the industry so we took off our patents rights. Any company can use our patents at no cost. They don’t even have to tell us that they are using the patents,” said Musk.

Tesla, which began selling the Model S in China about one and a half years ago, sold 3,025 units of the model in the country in the first nine months of this year, or about 9.1 percent of its global sales of 33,157 units. It has already built 84 supercharging stations and 1,500 destination charging poles in China, while  installation rate of home charging poles in the country has reached 90 percent.

The company also recently began taking orders for the Model X in China and deliveries are expected to begin in the second half of 2016.

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