California-based electric vehicle (EV) manufacturer Tesla recently opened the world’s largest Tesla service center, encompassing 100,000 square feet, in Tsuen Wan, Hong Kong in response to the burgeoning demands for EVs. As of July 2016, the city had 5,800 EVs, of which 80% are Tesla models. Impressed by the sale performance of his brand, Elon Musk, founder of Tesla Motors, called Hong Kong a “beacon city for electric vehicles,” and he sees further potential in the city’s EV market, as EVs still only account for 1% of private cars in Hong Kong. Already, there are 12 Tesla Supercharger stations in Hong Kong, compared to four in Tokyo and seven in the Bay Area.
In 2015, the Tesla Model S was the bestselling sedan in Hong Kong, with 2,221 Model S units sold that year. Registrations for EVs saw a 270% growth from 2014 to 2015. Although the impressive sale performance of Tesla in Hong Kong is partially due to the quality of its products, it is also thanks to Hong Kong government initiatives. To combat air pollution and traffic congestion, the city levies a tax of 115% of the sticker price for every car sold, but EVs enjoy a tax waiver in which no tax is levied.
The Silicon Valley-based automaker is only one of the many companies that gain from robust trade with Hong Kong. In California’s 18th congressional district, where Tesla and other high-tech companies such as Oracle and Hewlett-Packard are headquartered, Hong Kong was the third largest export destination in Asia, with goods worth $408 million exported to the city in 2012. Tesla Motor’s manufacturing headquarters that employs roughly 6,000 employees is located in California’s 15thcongressional district, producing vehicles for both the US and overseas markets. Among a variety of goods that the district exported to Asia, motor vehicles were the second largest individual category of exported goods in 2012, and Hong Kong was the district’s 5th largest goods export destination in Asia. In California’s 17th congressional district, where Silicon Valley’s heart lies, Hong Kong was the district’s 2nd largest goods export destination in Asia with over $1.2 billion worth of goods exported to Hong Kong in 2012.
Chien-Chou “Antonio” Liao is a Research Intern at the East-West Center in Washington and a Recent Graduate of the American University School of International Service.