Tesla's "catfish effect" and China's 10-million-units milestone in NEV production

Estimated reading time: 5 minutes

By Hua Ping, People's Daily

In April 2018, Chinese President Xi Jinping announced that China would ease as soon as possible foreign equity restrictions, in automobile industry in particular.

Three months later, Tesla unveiled a plan to set up a factory in Shanghai, with a total investment of 50 billion yuan ($6.91 billion) and an annual capacity of 500,000 units. In January 2019, construction work of the factory commenced and the first vehicle manufactured by the plant rolled off production line in December that year.

The Shanghai Gigafactory of Tesla is the first wholly foreign-owned NEV manufacturing project in China. It was commenced, completed and put into operation in the same year. As it provides huge opportunities for Tesla, the plant also generates the "catfish effect," forcing Chinese carmakers to speed up innovation.

One of the important reasons for China to be able to produce more than 10 million NEVs in a year is that Chinese carmakers, amid fierce competition in an open environment and facing the "catfish effect," stood up to challenges and actively sought for changes.

In this open competition, Chinese carmakers have sharpened their capabilities, making China the world's most dynamic innovation hub of NEV technology. In 2023, China became the largest vehicle exporter globally. It sold over 1.2 million NEVs to other parts of the world, up 77.6 percent year on year.

Since Nov. 1, a new version of the negative list for foreign investment access has come into effect, reducing the number of restrictions from 31 to 29. It indicates China's resolution in promoting higher-level opening up, as well as the country's courage to improve its opening-up capability and build new competitiveness through expanded international cooperation.

The "10-million-units" milestone is based on the accelerated integration between technological innovation and industrial innovation. A batch of Chinese NEV brands have emerged, becoming pace setters in sales and production, core technology and intelligent technology.

The "10-million-units" milestone marks a "green achievement" of the global new energy industry. It signifies a new starting point of high-quality development for Chinese NEV manufacturers, and mirrors the rapid growth of new quality productive forces characterized by green development.

Green and low-carbon development is a general trend that cannot be stopped by "small yard, high fences." In the first three quarters of this year, China exported 928,000 NEVs, up 12.5 percent from a year ago. This proves global consumers' recognition for quality products and pursuit of green and low-carbon development, despite tariff hikes on these Chinese products.

Win-win cooperation creates a bright future, while exclusiveness only leads to a dead end. Win-win cooperation is the sure way to success in launching major initiatives that benefit all.

Leveraging its advantages in technology and brand influence, as well as the super large Chinese consumption market, Tesla has seen a significant rise in its sales that is also driving the rapid development of the industrial and supply chains.

Currently, over 95 percent of parts used at Tesla's Shanghai Gigafactory are produced locally, and over 60 suppliers have entered the company's global supply chain system.

Thanks to China's complete supply chain system and top-notch intelligent manufacturing, a vehicle is rolling off the production line at Tesla's Shanghai Gigafactory every 30 seconds. In 2023, Tesla vehicles manufactured in China accounted for over half of the company's global production, and 36 percent of the vehicles manufactured in China were exported.

Tesla's success in the Chinese market is a win-win and all-win outcome. It conforms to the general trend of global division of labor in the industrial and supply chains in the era of economic globalization. It showcases the philosophy of win-win cooperation and harmonious coexistence.

Today, more and more multinational carmakers are leveraging China's advantages in market, technology and institutional opening up to realize their "coming to China for global success" goal. Chinese NEV manufacturers, by establishing overseas production facilities in Hungary, Spain, Myanmar, Malaysia, Brazil and more, are contributing their part to global green and low-carbon transition.

On Nov. 14, local time, the Chancay Port in Peru, an important project under Belt and Road cooperation between China and Peru, was inaugurated. It is the first intelligent and green port in South America. It will create over 8,000 jobs directly for Peru each year and generate revenue of $4.5 billion. A new land-sea corridor between Asia and Latin America is taking shape.

All people live in an interdependent world and rise and fall together. Only by maximizing consensus on win-win and all-win cooperation can a bright future be created.

Chinese path to modernization is a modernization that follows the path of peaceful development. Following the philosophy of win-win cooperation, China is continuously providing new opportunities for global development with its own modernization achievements. It is ready to work with all parties to advance global modernization featuring peaceful development, mutually beneficial cooperation and common prosperity.

Advancing reform and development through opening up, China now has more confidence and composure.

Our shared future depends on Earth. Working together for a shared future of humanity with a more open and inclusive mindset, the world will soon embrace another milestone achievement in green development.