February 14, 2018 News of the Day: Tesla's Plans to Open a Factory in China Stall as it Still Needs a Chinese Partner, Faraday Future Receives $1.5 Billion Lifeline

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【Summary】February 14, 2018 News of the Day

Eric Walz    Feb 14, 2018 3:48 PM PT
February 14, 2018 News of the Day: Tesla's Plans to Open a Factory in China Stall as it Still Needs a Chinese Partner, Faraday Future Receives $1.5 Billion Lifeline

Tesla's Plans to Open a Factory in China Stall as it Needs a Chinese Partner

Tesla Inc., the biggest-selling electric carmaker in the U.S., is finding it difficult to open a factory in China. Currently, all foreign automakers must partner with Chinese companies in order to manufacture locally, and so far, Tesla has been reluctant to secure one.

China's central government says the Tesla plant must be a joint venture with local partners, while Tesla wants to own the factory solely, the people said, requesting not to be identified because the negotiations are confidential.

Last year, Tesla said it was working with Shanghai's government to explore assembling cars in China. However, an agreement hasn't been finalized because the two sides disagree on the ownership structure for a proposed factory, according to people with direct knowledge of the situation.

The disagreement does not mean a deal won't be reached in the near future. Tesla currently sells cars in China, but an import tax of 25 percent adds substantially to the cost of one. For example, a Tesla Model X made in the U.S. and shipped to China costs about 835,000 yuan ($132,000), providing market space for lower priced models from domestic rivals BAIC, Warren Buffett-backed BYD, NIO, and another new startup Byton.

"It's a market they need to get a foothold in," said Jeffrey Osborne, a New York-based analyst for Cowen & Company. Tesla said it currently has 31 retail stores across China and more than 1,000 Superchargers, which can recharge a Tesla model in just 30 minutes.

Tesla's sluggishness in starting local manufacturing means it's missing its chance to capitalize on China's push for new-energy vehicles (NEVs) in the world's largest market, including EVs, plug-in hybrids and fuel-cell vehicles.

Tesla said in June it was working with the Shanghai government to explore local manufacturing, and it expected to more clearly define production plans by the end of 2017. The company said it needed to have local factories "to ensure affordability for the markets they serve."

In November, Musk said during an earnings call the company was about three years away from starting production in China. However, his estimate remains uncertain. "Don't set your watch by this," Musk said.

President Xi Jinping's administration wants to scrub China's notorious air pollution and reduce the country's dependence on imported oil. The government is offering billions of dollars in subsidies to entice consumers away from fossil-fuel powered vehicles.

Tesla is ranked 10th behind leader BAIC's affiliate, Beijing Electric Vehicle Co., which sold 102,341 cars, according to Bloomberg Intelligence. BYD sold 33,020 for third place.

Sales of electric and plug-in hybrid vehicles are brisk in China. Sales reached 777,000 units last year and could surpass 1 million this year, the China Association of Automobile Manufacturers estimated. The government's aggressive target is for 7 million vehicles a year by 2025.

BYD's e5, which is the company's top selling model costs 129,900 ($20,495) yuan after subsidies from the central government, according to its website. NIO and Byton also beat Tesla on price. NIO's ES8 sells for 448,000 yuan ($71,000). Byton, a Nanjing-based company started by former BMW AG executives, unveiled a sleek $45,000 SUV at last month's CES in Las Vegas.

In the U.S., Tesla accounted for the majority of the 104,471 electric vehicles sold, according to data compiled by Bloomberg. In China, however, Tesla sold 14,883 vehicles, accounting for just 3 percent of the nation's battery-powered EV sales of 449,431 units.

Faraday Future Receives Parts of its $1.5 Billion Lifeline


The Faraday Future FF91

Faraday Future has had a rough 2017, as financial struggles and employee exodus stalled the progress on its much hyped electric car. Now the company is reported to be getting back to business, focusing on its groundbreaking electric vehicle with a new infusion of cash.

According to a source with knowledge of Faraday Future's business dealings, the company has secured about $1.5 billion in new investment. The news of the new funding was first reported in December. The source did not reveal the investor's identity, saying only that it is a Hong Kong-based entity.

Faraday received $550 million of that investment so far. About $300 million arrived in early December, according to the source. Another $250 million was received earlier this month. Receipt of the remaining $950 million is contingent on reaching undisclosed project milestones.

Faraday Future's top backer, Jia Yueting, set out to challenge electric car maker Tesla. In the spring 2016, he said "We hope to surpass Tesla and lead the industry leapfrogging to a new age" in an interview with Reuters. That month, the company had hosted a well-attended ceremonial groundbreaking for its proposed factory in North Las Vegas.

The company's FF91 is a luxurious, 1,000-horsepower electric car. Instead, the unpaid bills, lawsuits, an employee exodus, and public bickering with former executives have defined what had once been a potentially exciting new challenger in the race to build the next great electric-car company.

The company hosted a suppliers summit this week at its Los Angeles-area headquarters to show it's not giving up just yet. "Our goal was for suppliers to walk away with renewed confidence about our plans and our funding," Faraday's head of supply chain Pablo Ucar said in a press release.

Faraday has had a rough time trying to keep its bank accounts from drying up over the past year. That struggle reached a critical point as far back as January 2017, when former executives told Business Insider that Faraday was just weeks away from bankruptcy. Those bankruptcy rumors resurfaced last fall.

Last spring, the company brought on former BMW exec, Stefan Krause as chief financial officer. Krause launched a worldwide blitz to raise $1 billion in cash for Faraday. It was mostly unsuccessful, and Krause left the company to open his own electric-car startup, prompting an intellectual-property lawsuit.

Faraday has been drowning in debt in the U.S., while Jia Yueting, who is also the company's founder and chief executive, is being pursued by Chinese regulators for hundreds millions of dollars in unpaid debts tied to his companies there.

Luxury Electric Vehicle Company Polestar Establishes New Headquarters in Sweden


Polestar, the luxury electric brand under Volvo, is in the process of spinning off from its parent as the Scandinavian automaker's dedicated electric performance brand. One part of the company's plans is setting up new headquarters in Sweden.

The new facility will be located in Torslanda, on the same campus as the Volvo factory and head office. Polestar will be producing its vehicles in China.

"The new Polestar headquarters will be the heart and home of our growing team," said Polestar CEO Thomas Ingenlath. "It is an architectural translation of what our brand stands for – it is pure and uncompromised."

Slated for completion in September, the office building will encompass over 40,000 square feet of floor space across three levels. Some 200 employees will work there, between the offices and development area. That's up from the 110 that Polestar currently employs in facilities across the country.

The cube-shaped building will feature an open layout, with a rather imposing-looking white facade. There will also be a showroom incorporated into the facility, to showcase the electrified vehicles the brand is preparing to build.

"We have created an uncompromising and minimalistic ‘cube' as the main feature of the building that, with its technical solutions and details, creates a clear link between architecture and modern product design," said Per Bornstein of Bornstein & Lyckefors, the renowned Swedish architecture firm tasked with the job. "One of its unique design features is a white facade made entirely in glass that lets around 60% of the light through, a first in Sweden and a challenge both in terms of design and engineering, but completely in line with Polestar's progressive approach."

Renault chose the Stockholm location as Sweden is a country that has embraced electric vehicles, and EV sales are strong in the country.

Renault to Open its First Dedicated EV Concept Store in Europe


Renault is opening its first European concept store in Stockholm this week called the Renault Electric Vehicle Experience Center, where visitors will be able to discover the benefits of electric mobility. The model is similar to Tesla's showrooms, where people can go and learn more about the technology and the company's vehicles.

The electric vehicle showroom for Renault's EVs will be located in Täby Centrum, one of Sweden's largest shopping malls, on the outskirts of the country's capital. The location is considered a prime spot to promote the advantages of electric motoring as a means to address the issue of urban mobility.

"We are delighted to be opening this store which will enable us to engage with people about electric mobility, help them to learn more about the subject and give them a chance to share their ideas. As Europe's number one EV brand, we will be able to use this concept store to interact with the public and help people to understand the opportunities and benefits of electric motoring," said Gilles NORMAND, Groupe Renault Senior Vice President, Electric Vehicles.

The concept store features a number of distinct zones, including a display of electric vehicles and areas where visitors will find information about charging infrastructure and systems, local legislation, subsidies, conditions of purchase and electric-vehicle-related services, as well as a place to relax.

Visitors will be able to test drive electric vehicles directly on site as well, in order to experience driving an electric vehicle. Customers will also be able to order new electric vehicles at the showroom.

Advisors will also be available seven days a week to assist customers. The store will also feature an advanced digital experience, including an exclusive electric car configurator to enable customers to build the model that best meets their needs.

"Stockholm was on top of our list because of the fast Electric Vehicle market expansion in Sweden, and the strong willingness of Swedish government to promote this technology," said Zakaria Zeghari, Europe Renault Dealer Network Development Director.

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