For Chinese-backed automotive companies following in Tesla’s electric vehicle footsteps, California has become the entry point into the US electric vehicle (EV) market.
In the past decade, China has been no stranger to electric vehicles, serving as the world’s largest EV market. This is partly because China sees EV cars, which produce no exhaust, as a solution to persistent urban air pollution and have since buoyed the industry by providing subsidies and funding a network of charging stations. In 2016, it was reported that China registered over 350,000 new electric vehicles, overshadowing the 159,000 US EV registrations over the same time period. Palo Alto’s Tesla Motors maintains a decent chunk of the Chinese luxury EV market share, selling over $1 billion worth of cars in China in 2016, 15% of the company’s total sales for the year. Tesla is looking to expand operations in China, announcing its participation in discussions to establish a manufacturing plant in Shanghai. For Tesla, manufacturing cars in China would help them avoid steep import taxes and forge partnerships with Chinese car companies.
Over the last two years, however, Chinese financiers of auto firms have been trying to reverse engineer Tesla’s overseas success by breaking into the US EV market. Since 2014, a handful of automotive start-ups, each backed by major Chinese investors, have set up shop in California. One of the first to enter the country was Faraday Future, tied to electronic brand Le Eco and Chinese billionaire Jia Yueting. Faraday had plans to begin manufacturing in Nevada in 2019 and is already racing a Formula E car in the New York ePrix mid-July. Other companies include Karma Auto, Nio US, BYD, and Chongqing Auto’s SF Motors. Among these, SF Motors is the newest, opening its US headquarters in Santa Clara on June 13th.
California is a natural location for Asian EV investment. In addition to its proximity to overseas shipping lanes, California boasts a talent pool with experience in high tech electrical engineering. Tesla’s cofounder, Martin Eberhard, has played a significant role in the Chinese EV expansion, recently signing on as a consultant with SF Motors. Chongqing Auto’s SF Motors has also committed to cultivating its own American talent outside the state, recently signing an agreement with the University of Michigan to open an R&D facility in the near future.
Olive Eisdorfer is an undergraduate at George Washington University's Elliott School of International Affairs.