Hacker News Reader

Comment by scumbert | Hacker News Reader

Thanks for being a realist. All the significant "competitors" domestically are arms of the Chinese state. Tesla's calculations have to be aware of that.

View on HN

Elon has said that the key Tesla technology is the factories. The battery factory and the car factory that they are constantly evolving. That's much harder to replicate in China, mainly because those companies can operate very inefficiently thanks to State sponsorship.

https://cleantechnica.com/2018/06/30/automating-intelligentl...

Tesla doesn't seem to keep engineering of new factory processes out of china [0]. The batteries for GF3 seem to be bought from LG Chem [1]. So yeah, I don't see Tesla being that worried about their IP or something like that.

[0] https://old.reddit.com/r/teslamotors/comments/d8un7f/tesla_i... [1] https://old.reddit.com/r/teslamotors/comments/d7i0vk/lg_chem...

Most Android phones are made in China, many by Chinese companies. Yet iPhones are still popular there.

I don’t see why Tesla can’t do the same as the more upmarket brand.

Have any of the Chinese companies come close to designing something as nice as any of the Tesla cars?

This. Tesla Model S’s are going to those who would be driving black Audi A6s anyways. There isn’t Chinese brand loyalty in the high end car market, no one thinks any BYD can substitute for a BMW, Mercedes, or Audi. Note all these are already made in China anyways.

I would almost think that the higher end of Chinese consumers, educated in other countries and working for international firms, might even prefer non-Chinese brands.

Which is also why iPhones are popular there. American plus expensive is cool. It also doesn’t hurt that they are the best phones around and Tesla 3 seems to be doing pretty well in their market position with their unique cars which stand out.

> Tesla's calculations have to be aware of that.

Ehn, everyone seems prone to short term thinking.

Tesla has two calculations:

1) Is demand outpacing supply? Yes? Great, therefore...

2) The more cars we can build, the more money we make

3) The more EVs on the road, the more demand there is for Teslas.

That’s about it. That leaves them with two opportunities: A) scaling manufacturing, and B) encouraging EV adoption. That’s part of why they spend so much effort making the cars appealing, super fast, etc.

They can self sustain a virtuous cycle with just A) but if they scale manufacturing enough B) will eventually matter.

They want China to steal their IP. They also want China to help them build factories. It’s really a win-win for them.

Source for them being arms of the Chinese state?

Some of them are state-owned, but the two largest electric vehicle manufacturers in China are not. In descending order of revenue from electric vehicles (source: [1]):

* BYD (a publicly traded company, listed on the Hong Kong Stock Exchange)

* Geely (also traded on the HK Stock Exchange)

* BAIC (state-owned, sells a lot of plug-in hybrids)

* SAIC (state-owned)

* JAC motors (state-owned)

BYD and Geely's combined electric-vehicle revenue is significantly larger than that of BAIC, SAIC and JAC (combined). The electric vehicle market in China does not appear to be dominated by state-owned companies.

1. https://www.bloomberg.com/opinion/articles/2019-09-20/electr...

This is a de facto requirement for operating out of China.

What is a requirement?

Instead of vague statements about everything in China being state controlled, how about some actual facts? What, concretely, does this control entail? How does it function?

> What, concretely, does this control entail? How does it function?

Party members "inspecting" facilities, demanding access to records, issuing whimsical and unappealable orders, et cetera.

You're asserting that the Chinese government uses these mechanisms to set the business plans of BYD and Geely? In other words, that BYD and Geely do not make decisions based on business considerations and the profit motive, but rather because the Chinese government orders them to make those decisions?

I'm trying to understand just how you imagine things work in China.

State control of the massive private sector companies - de facto or de jure, either way works for the CPC - is increasingly a requirement.

Sept 23: "China Boosts Government Presence at Alibaba, Private Giants"

"The government of one of China’s top technology hubs is dispatching officials to 100 local corporations including e-commerce giant Alibaba Group Holding Ltd., the latest effort to exert greater influence over the country’s massive private sector."

“They might be checking whether the Communist party units are working effectively within the companies,” said Paul Gillis, a professor at Peking University’s Guanghua School of Management. “While China legitimized capitalism, the level of government influence was never intended to disappear. Occasionally private entrepreneurs forget about this and are reminded of it.”

https://outline.com/cgRmV5

https://www.bloomberg.com/news/articles/2019-09-23/china-ste...

Reply on news.ycombinator.com