Tesla's China operations demonstrate potential of win-win cooperation

Despite recording a slight drop in its global deliveries in 2024, US electric vehicle maker Tesla saw its sales in the Chinese mainland reach a record high of 657,000 units, up 8.8 percent year on year. Meanwhile, Tesla's energy storage Megafactory in Shanghai has started trial production recently.

Tesla's story in China serves as a case study of the country's opening-up, business environment and its industrial strength in the new energy vehicle (NEV) sector. It also demonstrates the mutually beneficial potential of cooperation.

Tesla's Gigafactory in Shanghai is the first wholly foreign-owned car manufacturing enterprise in China. The factory was built and inaugurated within a year in 2019. It now accounts for more than half of Tesla's global deliveries.

The Megafactory, Tesla's second plant in Shanghai, was completed about seven months after construction began in May 2024. The amazing speed of the two projects is indicative of China's business environment. Furthermore, Tesla has been included in multiple local government procurement catalogs, highlighting China's equal treatment of domestic and foreign enterprises.

Undoubtedly, Tesla's investment in China is a success and delivers win-win outcomes. This would be impossible without China's firm commitment to opening-up and its consistent efforts to improve its business environment. The country's big market and complete industrial chains are also vital to the Shanghai factory's growth. The localization rate of the Shanghai Gigafactory's industrial chain exceeds 95 percent.

Tesla is a popular brand among Chinese consumers. About two-thirds of vehicles produced by the Shanghai Gigafactory are sold in China, and one-third are exported to overseas markets such as Europe. The energy-storage batteries, or Megapacks, produced by the Megafactory Shanghai will also supply the global market.

Driven by robust domestic demand amid the country's green transition drive, China's NEV industry has seen remarkable growth in recent years. In 2024, China's NEV output exceeded 10 million units for the first time. Tesla was one of the major contributors to this landmark scale. Currently, 90 percent of the NEVs produced in China are sold domestically.

More importantly, China's NEV industry has grown in a vibrant marketplace teeming with competition across state-owned, private and foreign enterprises. With a "catfish effect," Tesla, as a key competitive player, has helped push the innovation and growth of China's NEV sector.

Just like Tesla, leading Chinese NEV and battery makers have invested in a number of countries globally, including Hungary and Brazil. This attests to the robust global demand for green products like NEVs, and to the shared aspiration for a sustainable planet. In 2030, the global demand for NEVs will be three times the 2023 figure, according to the International Energy Agency. All of these facts show that the so-called "overcapacity" rhetoric about China's NEV industry is nothing but an excuse for protectionist trade measures.

Tesla's Shanghai plants exemplify successful cooperation in the new energy sector between China and the United States. Green transformation can be a key area of China-US cooperation. Working together, the world's two largest economies can help build a sustainable planet.

In an interdependent world, with the interests of different countries deeply intertwined, economies will either progress together through connectivity and unity, or retreat due to closure and division. The sole wise choice for all is to build the greatest possible consensus for mutually beneficial outcomes, and to work together to increase the size of the global economic pie through openness.

Greater success is expected for Tesla's business in China. In advancing its own green modernization, China will offer new business opportunities with more high-standard opening-up measures. It is hoped all countries meet the trends of the times and tap the potential for mutually beneficial cooperation to achieve common prosperity that benefits all.