Tesla zeroes in on Beijing for design center to build Chinese-style cars for the mainland market

Tesla is the runaway leader in China’s premium electric car segment. Photo: Bloomberg

Tesla plans to set up a design center in Beijing to develop cars specifically for the Chinese market, stepping up plans to consolidate its foothold in the world’s largest automotive market.

The US carmaker’s design and engineering hub will be one of the key projects in China’s capital this year, according to a report by the Beijing municipal government.

Construction of the center will start this year, but other details such as investment and inauguration date were not provided.

“Tesla has every reason to increase investment in China amid strong sales of its vehicles in the country,” said David Zhang, a researcher for the automotive industry at the North China University of Technology. “Building Chinese-style cars for Chinese people is a good idea and it obviously is stepping up a gear to implement its China strategy."

In January 2020, Tesla said that it would establish a design center in China to better serve customers in one of its biggest markets. The announcement came just a month after the Elon Musk-helmed carmaker launched operations at the Gigafactory 3 in Shanghai, Tesla’s first plant outside the US.

Tesla China declined to comment on the design center on Friday.

The Gigafactory, with annual production capacity of 450,000 units, delivered 484,130 vehicles in 2021, representing 51.7 percent of its global total of 936,000 units.

Excluding exports of the Shanghai-made Model 3 and Model Y vehicles, Tesla sold 321,000 cars on the mainland last year, 117 percent higher than 2020.

The Shanghai factory, based in Lingang's free-trade zone, is the mainland’s only fully foreign-owned vehicle assembly line.

Tesla is the runaway front runner in China’s premium electric vehicle segment, as the hi-tech features of its products, including Autopilot driver assistant system and high-performance batteries, easily click with young Chinese drivers.

Tesla is not the first foreign carmaker to set up a design center in China.

General Motors founded its Shanghai-based Pan Asia Technical Automotive Center in 1997 to design and develop vehicles specifically for the mainland market.

The Chevrolet Sail, a compact car launched in 2001, was the first vehicle fully designed and developed by local engineers for the Chinese market.

China’s automotive industry surpassed the United States in 2009 as the world’s largest vehicle market and has retained the title ever since.

Over the past two years, new-energy vehicles (NEVs) have emerged as the new growth engine for the country’s car-making sector, which has been buoyed by Beijing’s ambitions of becoming a global leader in the future of mobility.

China reported sales of 2.99 million NEVs – comprising pure electrics, plug-in hybrids and fuel-cell cars – in 2021, up 169 percent on the year.

NEV sales are expected to top 5 million units this year, according to the China Passenger Car Association.



PUKmedia / South China Morning Post