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Why investors search for a Chinese Tesla
Yang Jian | 2017/12/1

SHANGHAI -- Tesla Inc. has yet to build any vehicles in China and its import sales in the country are modest.

Yet this "boutique" automaker -- which has never turned a profit -- has become the darling of China¡¯s media, investors and entrepreneurs. 

Tesla CEO Elon Mask disclosed in 2015 that the company planned to launch production in China. And ever since, Chinese media have kept close track of Tesla¡¯s progress toward launching local output. 

In search of manufacturing sites, Tesla executives have contacted local officials in Guangdong province and in the east China cities of Suzhou and Shanghai.

All this has been widely reported by Chinese media. 

And when local media outlets describe Tesla¡¯s scouting expeditions, investors scramble to buy shares of domestic electric vehicle makers such as BYD Co. and Jianghuai Automobile Co.

Even though Tesla has yet to make a profit, Chinese investors regard it as a highly successful company, and the proof is Tesla¡¯s sky-high stock price on the Nasdaq. 

Every step that Tesla takes toward manufacturing in China is viewed as an indicator of the company¡¯s confidence in the future of China¡¯s EV market.

Tesla has been idolized not only by China investors but by local entrepreneurs. Over the past three years, dozens of EV startups have emerged and all of them dream of raising huge sums from an initial public stock offering. 

But EV manufacturing is a risky business with a high cash-burn rate. 

LeEco has learned a bitter lesson about this. Established in 2004 as a Beijing-based video streaming website, LeEco has ventured into filmmaking, TV manufacturing, mobile phones, broadcast sports programs and even ride-hailing services.

Inspired by Tesla¡¯s success story, LeEco founder Jia Yueting hatched a plan in 2015 to produce electric sports cars in the U.S. and China.

But LeEco¡¯s ambitious EV project foundered this year because of a severe cash crunch. Jia is now hanging out in his California beach house and he dares not return to China where numerous creditors await him.

Will LeEco¡¯s fiasco discourage Chinese entrepreneurs who want to be the next Elon Musk? It won¡¯t. 

Unless Tesla¡¯s stock price plummets, the company will bask in the media¡¯s warm glow, and local EV startups will attract investors in search of a Chinese Tesla.

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