Tesla chief executive Elon Musk has called on the US president to challenge China’s auto trade rules, which limit foreign ownership of joint ventures and impose higher tariffs on imported cars than the United States.
In apparent justification of his controversial decision on Thursday to impose new tariffs, US President Donald Trump read off tweets by the Tesla CEO that called on the president to challenge China's stiff import duties on cars.
Elon Musk noted that China was charging a 25 percent import duty on cars — ten times the 2.5 percent levy the US puts on China-built vehicles.
Musk also said he was "against import duties in general, but the current rules make things very difficult. It's like competing in an Olympic race wearing lead shoes."
The company had raised the issue with the prior US administration, Musk added, but nothing had happened. All Tesla wanted was a fair outcome, "ideally where tariffs/rules are equally moderate."
China's levies on car imports are a problem for the US e-car pioneer, which wants to expand its presence in the country's growing electric vehicle market without compromising its independence or intellectual property.
Controversy over ownership rules
Musk's lobbying is also a sign of his frustration over struggling to get a deal done with Shanghai's government to assemble cars in China. An agreement hasn't been finalized because the two sides disagree on the ownership structure for a proposed factory.
China's central government is pushing for the plant to be a joint venture with local partners, while Tesla wants to keep full control of the venture.
"No US auto company is allowed to own even 50 percent of their own factory in China, but there are five 100 percent China-owned EV [electric vehicle] auto companies in the US," Musk wrote in another tweet.
Trump was quick to lap up the criticism, saying that US politicians had known this for years but did nothing. "It's got to change," he said as he signed his executive order on the new steel tariffs on Thursday. He added that he planned to charge other countries "mirror taxes" for what American products face.
Rules change ahead?
Import duties and the difficulties Tesla has had avoiding them by trying to produce in China has held the company back in the world's biggest market for cleaner cars. Sales of battery-electric, plug-in hybrid and fuel cell-powered autos could surpass one million units this year, according to the China Association of Automobile Manufacturers.
The Chinese government's aim when introducing the 50-percent ownership policy in the 1990s was for its then-fledgling auto industry to benefit from technology transfer by operating along with global giants including Volkswagen and General Motors.
The National Development and Reform Commission said in June 2016 that China was looking into lifting the cap on foreign ownership.
uhe/mm (Reuters, AFP)