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Main article: China

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GGV Capital says mom-and-pop shops can boost e-commerce in emerging markets

01:54 | 18 February

Despite the rapid growth of e-commerce in India, Southeast Asia and other emerging markets, the vast majority of retail transactions there still happen offline in small stores that also serve as neighborhood hubs.

The central role these stores play in their communities led GGV Capital to develop what the firm refers to as its mom-and-pop shop investment thesis. This means backing startups that help small retailers digitize operations, tap into better supply chains and serve as delivery points in markets where logistics and online payment infrastructures are still developing. In turn, GGV’s managing partners believe this will lay the groundwork for stronger e-commerce growth.

Companies that GGV has already invested in under this thesis include B2B e-commerce platform Udaan and Telio, bookkeeping app KhataBook and social commerce startup Shihuituan (also called Nice Tuan) in China.

A sociological approach to e-commerce investment

GGV managing partner Hans Tung says the mom-and-pop shop thesis means looking at consumers’ shopping habits across countries and understanding why they are different from a historical and social perspective. During his career, Tung has observed e-commerce develop in markets including the United States, China, Japan, Taiwan, India, Southeast Asia and Latin America. Offline shopping habits, population density, transportation infrastructure and credit card penetration all played a factor in how e-commerce evolved in each of those places.

“You realize e-commerce doesn’t exist in a vacuum. It exists as a substitute for what is happening in the offline world,” he says. “Mobile payment doesn’t happen in a vacuum. It just fulfills the same needs with a different method. It was a substitution for what was happening in the offline world with credit card and debit card penetration.”

 


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Catching up on China’s tech influence operations in America

19:44 | 13 February

It’s been a dizzying few weeks following all the China news emanating from Washington DC these days. While a “phase one” trade deal with China has been signed and appears to be moving forward as of a month ago (we covered the origins of this trade war extensively on TechCrunch in 2018 and 2019), it has also become clear that the Trump administration and its various agencies are aggressively targeting China on a variety of fronts.

Here’s what’s been happening with startup funding, Huawei, university research labs, and cybersecurity breaches.

More challenges for startups fundraising Chinese dollars

As of a few weeks ago, the Trump administration completed the final rulemaking around its modernization of foreign investment rules. Those rules went into force today, and will help to define what startups can take money from which foreign nationals. Those rules will now be used by CFIUS – the Committee on Foreign Investment in the United States — which has authority to rule over major venture transactions.

Martin Chorzempa of the Peterson Institute for International Economics wrote an extensive overview of what’s changing here. The closest summary is that Silicon Valley startups that take significant money from overseas investors (significant here is generally about percentage ownership of a company rather than total dollars) will increasingly need to go through national security reviews in DC, which can vastly delay the closing of venture rounds.

While China is certainly in the crosshairs of these new rules, other investors have been hit by them as well. SoftBank’s Vision Fund, which had a very bad quarter this week, is also a target under these new rules, complicating that fund’s future investments in America.

Some firms though are preparing for the long haul. Sequoia hired a major CFIUS veteran to be its general counsel last year, and from what I hear, other venture firms are providing more advice to founders to actively avoid international investors that might trigger these sorts of national security reviews in the first place.

All this of course is in the context of a collapse in Chinese venture capital, which was already in dire straights even before the coronavirus situation the past few weeks put a massive brake on the Chinese economy. Chinese VC dollars flowing into the Valley hasn’t stopped, but it is a trickle from the sloshing free trade days of just a few years ago.

Huawei is coming to the West, despite the wishes of the Trump administration

The Trump administration has made it a high-priority to shut Huawei out of Western telecom systems. It first tried to do that by essentially shutting the company down along with China’s ZTE by banning the two companies from receiving U.S. export licenses to American technology critical to their products. That set of moves ultimately created blowback for the administration a few years ago and galvanized Xi Jinping and the Chinese government to create more indigenous devices.

The Trump administration is continuing to lose its war against Huawei though. In recent weeks, both the United Kingdom and Germany have indicated that they will accept Huawei equipment within their next-generation telecom networks, despite immense pressure from U.S. defense and intelligence officials pushing against that decision.

Part of the challenge for the Trump administration is that it isn’t even pushing forward with one voice. The Defense Department has actually supported Huawei’s position, arguing that fighting Huawei will ultimately undermine American chip market leaders like Intel, who need Huawei as a customer of their chips to continue funding their R&D efforts.

Meanwhile, Huawei late last week sued TechCrunch parent parent parent parent parent company Verizon (okay, maybe it’s only like three levels of corporate bureaucracy between us and them — I’ve honestly lost track in the reshuffles) over patent infringement. As the 5G race continually bubbles (it’s not really heating up despite attempts by telecoms to say otherwise), expect more of these patent fights.

Fighting Chinese influence in American university research labs

Most notably here, prosecutors at the Department of Justice charged Harvard University’s chairman of the department of chemistry Charles Lieber with failing to disclose payments he received from China totaling millions of dollars. Such disclosures are required since Lieber accepted federal research dollars through programs run by the National Institutes of Health and Department of Defense.

The payments described in the department’s complaint included a monthly honorarium of $50,000, hundreds of thousands of dollars for annual living expenses, and millions of dollars to build out a research lab at Wuhan University of Technology as a “Strategic Scientist.” Two other scientists were named in the complaint as well.

That’s not all though. We learned this morning that the Department of Education has launched new investigations into Harvard and Yale to look at billion of dollars of overseas funding for those universities over the past few years, attempting to triangulate exactly who gave money to those institutions and why. The Wall Street Journal reported that the prime targets of funding come from China and Saudi Arabia.

Finally, Aruna Viswanatha and Kate O’Keeffe of the Wall Street Journal compiled a number of university-level investigations, finding that dozens more scientists and other academics have failed to disclose overseas ties and funding, mostly from China.

These investigations have become a higher priority as the U.S. government increasingly feels that China has built an apparatus for stealing U.S. technology, particularly at the frontiers of science.

Justice indicts four Chinese nationals over Equifax breach

Finally, the other major story in the China influence operations beat is that the Department of Justice indicted four Chinese nationals over the 2017 Equifax breach that led to the loss of data for more than 150 million Americans.

According to the department’s complaint, four Chinese military hackers associated with China’s People’s Liberation Army broke into Equifax’s systems using an unpatched security vulnerability in Apache Struts.

The department’s indictment serves two purposes, even though the four alleged individuals in the indictment are highly unlikely to ever be prosecuted (China and the U.S. do not have an extradition treaty, nor is China likely to hand over the individuals to the U.S. justice system).

First, the indictments serve notice to China that the U.S. is watching its actions, and is able to determine with a high degree of precision who is breaking into these vulnerable technology systems and what they are taking. That’s important, as there are serious concerns in the defense community about identifying actors in cyberwar.

Second, the charges also help to connect the Equifax case to a similar breach at the government’s Office of Personnel Management, in which data on millions of government workers — including defense and intelligence personnel — was believed to be leaked to Chinese state-backed hackers.

Fighting Chinese influence has become a major project of DC officials, and therefore we can expect to see even more news on this front throughout the year, particularly with an election coming up in November.

 


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Shutterstock founder and CEO Jon Oringer steps down after 16 years

18:33 | 13 February

It’s an end of an era — and you might just want to snap a photo of it, and just maybe upload it for others to purchase

Jon Oringer, who founded New York City-based Shutterstock in 2003, announced today that he would be stepping away from his duties as CEO at the photo sharing and commerce company, effective in April. He will move on to be Executive Chairman of the board, and says in a letter posted this morning that he intends “to continue to be involved in the strategy and direction of the business including yearly planning, regular off-sites, M&A, capital allocation, and other large initiatives.”

Shutterstock, a publicly-traded company that debuted on NYSE in October of 2012, has grown prodigiously from its humble origins as a startup. The company today has a market cap of just under $1.5 billion, and has seen reasonable revenue growth over the past few years, expanding from just shy of $500 million in 2016 to $623 million in 2018. The company has been profitable, posting a full-year net income of $31 million in 2018, according to Yahoo Finance.

In his letter this morning, Oringer says that his proudest accomplishment though was disbursing more than $1 billion in earnings to freelance photographers and other creatives through the platform since its founding.

The timing of the announcement coincided with Shutterstock’s Q4 and 2018 financial results yesterday, which were a mixed bag. Overall revenue increased by 4% compared to a year ago, but net income sank 63%, and net income per share also declined by nearly 22%.

Those middling results were in line with the company’s trajectory over the past few years. The company’s market cap peaked in early 2014 at nearly $3.5 billion but has since hovered between $1 billion and $2 billion since 2015. Oringer says in his letter that he is the largest shareholder today in the company.

In addition to the company’s somewhat lackluster financial results, Shutterstock has also gotten into hot water recently over its censorship of search results in China. Sam Biddle at The Intercept showed in November last year that the company plowed over internal employee concerns in its pursuit of additional revenues from the Middle Kingdom.

Challenges around censorship, representation, and ultimately business fundamentals like revenue growth and profit will be on the mind of Stan Pavlovsky, who has moved up through a number of roles at the company and will assume the CEO title upon Oringer’s departure.

 


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Karma Automotive to lay off 60 more workers at California headquarters

02:24 | 13 February

Karma Automotive is laying off 60 workers at its Irvine, Calif., headquarters, just three months after cutting 200 workers, according to documents filed with the California Employment Development Department.

The Chinese-backed California-based startup filed the notice under the Worker Adjustment and Retraining Notification Act, which requires employers to alert the state of mass layoffs. The WARN report was updated Wednesday. The Orange County Register was first to report the layoffs.

A Karma spokesperson confirmed the layoffs and said a majority would be at the headquarters with a significantly smaller number being impacted at its Moreno Valley, Calif. assembly plant. Karma didn’t provide details on its total employee count, but did say “adjustments” will be made at its Irvine headquarters, Moreno Valley assembly plant and its Detroit Technical Center in Troy, Michigan.

Here’s the complete statement from spokesman Dave Barthmuss.

As Karma evolves beyond its initial birth as car company and emerges as a technology-focused innovator, there is a continuous need to adjust the size and skillset of its workforce to fulfill the task at hand. The company has therefore determined it necessary to realign resources in some business functions so it can grow its capabilities beyond just creating and selling luxury electric vehicles.

As Karma builds partnerships with other OEMs and start-ups to speed product development, we must staff appropriately to fully leverage and realize the kinds of efficiencies partnerships and collaborations can provide. The result of that decision is some adjustments at Karma’s Global Headquarters in Irvine, Calif.; the Karma Innovation and Customization Center in Moreno Valley, Calif.; and our Detroit Technical Center in Troy, Mich. Although clearly regrettable for the individuals involved, this action is part of the natural trajectory of a start-up enterprise and underlines Karma’s commitment to remain lean, nimble and focused on building partnerships to encourage success in a changing and hugely competitive marketplace.

The company continues to actively recruit, with emphasis on technology innovation, in functions across the company as we focus on retail deliveries of our current products and developing new vehicle platforms, technologies and business partnerships.

The layoff notice comes just a month after several executive hires at the company, including a chief revenue officer, a new vice president of strategy and vehicle line engineering and a head of supply chain. Karma does have a handful of jobs posted on its website, including 11 positions at its Irvine headquarters and two spots at the Moreno Valley plant.

Karma Automotive launched out of the the remnants of Fisker Automotive, the startup led by Henrik Fisker  that ended in bankruptcy in 2013. China’s Wanxiang Group purchased what was left of Fisker in 2014 and Karma Automotive was born.

It hasn’t been the easiest of roads for the company. Karma’s first effort, known as the Revero, wasn’t received warmly. The Revero GT, which has been described as the first fully conceived product under the Karma name, followed with better reviews. The 2020 Revero GT is being delivered to retail customers, according to Karma.

Karma unveiled in November the Revero GTS and a new electric concept car called the SC2, just weeks after it laid off about 200 workers following a restructuring. Production of the GTS is slated for later this year.

The SC2 is a big part of Karma’s restructuring and plan to reinvent itself as a technology and design incubator that supplies other automakers. The company’s new business strategy is to open its engineering, design, customization and manufacturing resources to other companies. The GTS and SC2 were meant to show automakers what it is capable of.

 


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Nigeria is becoming Africa’s unofficial tech capital

07:17 | 3 February

Africa has one of the world’s fastest growing tech markets and Nigeria is becoming its unofficial capital.

While the West African nation is commonly associated with negative cliches around corruption and terrorism — which persist as serious problems, and influenced the Trump administration’s recent restrictions on Nigerian immigration to the U.S.

Even so, there’s more to the country than Boko Haram or fictitious princes with inheritances.

Nigeria has become a magnet for VC, a hotbed for startup formation and a strategic entry point for Silicon Valley. As a frontier market, there is certainly a volatility to the country’s political and economic trajectory. The nation teeters back and forth between its stereotypical basket-case status and getting its act together to become Africa’s unrivaled superpower.

The upside of that pendulum is why — despite its problems — so much American, Chinese and African tech capital is gravitating to Nigeria.

Demographics

“Whatever you think of Africa, you can’t ignore the numbers,” Africa’s richest man Aliko Dangote told me in 2015, noting that demographics are creating an imperative for global businesses to enter the continent.

 


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African fintech firm Flutterwave raises $35M, partners with Worldpay

14:00 | 21 January

San Francisco and Lagos-based fintech startup Flutterwave has raised a $35 million Series B round and announced a partnership with Worldpay FIS for payments in Africa.

With the funding, Flutterwave will invest in technology and business development to grow market share in existing operating countries, CEO Olugbenga Agboola — aka GB — told TechCrunch.

The company will also expand capabilities to offer more services around its payment products.

More than payments

“We don’t just want to be a payment technology company, we have sector expertise around education, travel, gaming, e-commerce, fintech companies. They all use our expertise,” said GB.

That means Flutterwave will provide more solutions around the broader needs of its clients.

The Nigerian-founded startup’s main business is providing B2B payments services for companies operating in Africa to pay other companies on the continent and abroad.

Launched in 2016, Flutterwave allows clients to tap its APIs and work with Flutterwave developers to customize payments applications. Existing customers include Uber, Booking.com and e-commerce company Jumia.

In 2019, Flutterwave processed 107 million transactions worth $5.4 billion, according to company data.

Flutterwave did the payment integration for U.S. pop-star Cardi B’s 2019 performances in Nigeria and Ghana. Those are two of the countries in which the startup operates, in addition to South Africa, Uganda, Kenya, Tanzania, Zambia, the U.K. and Rwanda.

Flutterwave Cardi B Nigeria“We want to scale in all those markets and be the payment processor of choice,” GB said.

The company will hire more business development staff and expand its developer team to create more sector expertise, according to GB.

“Our business goes beyond payments. People don’t want to just make payments, they want to do something,” he said. And Fluterwave aims to offer more capabilities toward what those clients want to do in Africa.

GB Flutterwave disrupt

Olugbenga Agboola, aka GB

“If you are a charity that wants to raise money for cancer research in Ghana, or you want to sell online, or you’re Cardi B…who wants to do concerts in Africa…we want to be able to set up payments, write the code and create the platform for those needs,” GB explained.

That also means Flutterwave, which built its early client base across global companies, aims to serve smaller African businesses, including startups. Current customers include African-founded tech companies, such as moto ride-hail venture Max.ng.

Worldpay partnership

The new round makes Flutterwave the payment provider for Worldpay in Africa.

“With this partnership, any Worldpay merchant in Europe or the U.S. can accept any African payment. If someone goes to pay Netflix with an African card, it just works,” GB said.

In 2019, Worldpay was acquired for a reported $35 billion by FIS, a U.S. financial services provider. At the time of the purchase, it was projected the two companies would generate revenues of $12 billion annually, yet neither has notable presence in Africa.

Therein lies the benefit of collaborating with Flutterwave.

FIS’s Head of Ventures Joon Cho confirmed the partnership with TechCrunch. FIS also backed Flutterwave’s $35 million Series B. US VC firms Greycroft and eVentures led the round, with participation of Visa, Green Visor and African fund CRE Venture Capital.

Flutterwave’s latest funding brings the company’s total investment to $55 million and follows a year in which the fintech company announced a series of weighty partnerships.

In July 2019, the startup joined forces with Chinese e-commerce company Alibaba’s Alipay to offer digital payments between Africa and China.

The Alipay collaboration followed one between Flutterwave and Visa to launch a consumer payment product for Africa, called GetBarter.

Flutterwave and African fintech

Flutterwave’s $35 million round and latest partnership are among the reasons the startup has become a standout in Africa’s digital-finance landscape.

As a sector, fintech gains the bulk of dealflow and the majority of startup capital flowing to African startups annually. VC to Africa totaled $1.35 billion in 2019, according to WeeTracker’s latest stats.

While a number of payment startups and products have scaled — see Paga in Nigeria and M-Pesa in Kenya — the majority of the continent’s fintech companies are P2P in focus and segregated to one or two markets.

Flutterwave’s platform has served the increased B2B business payment needs spurred by the decade of growth and reform that has occurred in Africa’s core economies.

The value the startup has created is underscored not just by transactional volume the company generates, but the partnerships it has attracted.

A growing list of the masters of the payment universe — Visa, Alipay, Worldpay — have shown they need Flutterwave to be relevant in Africa.

 


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Joby Aviation raises $590 million led by Toyota to launch an electric air taxi service

02:10 | 16 January

Joby Aviation has raised a $590 million Series C round of funding, including $394 million from lead investor Toyota Motor Corporation, the company announced today. Joby is in the process of developing an electric air taxi service, which will make use of in-house developed electric vertical take-off and landing (eVTOL) aircraft that will in part benefit from strategic partner Toyota’s vehicle manufacturing experience.

This brings the total number of funding in Joby Aviation to $720 million, and its list of investors includes Intel Capital, JetBlue Technology Ventures, Toyota AI Ventures and more. Alongside this new round of funding, Joby gains a new board member: Toyota Motor Corporation EVP Shigeki Tomoyama.

Founded in 2009, Joby Aviation is based in Santa Cruz, California. The company was founded by JoeBen Bevirt, who also founded consumer photo and electronics accessory maker Joby. Its proprietary aircraft is a piloted eVTOL, which can fly at up to 200 miles per hour for a total distance of over 150 miles on a single charge. Because it uses an electric drivetrain and multi rotor design, Joby Aviation says it’s “100 times quieter than conventional aircraft during takeoff and landing, and near-silent when flying overhead.”

These benefits make eVTOL craft prime candidates for developing urban aerial transportation networks, and a number of companies, including Joby as well as China’s EHang, Airbus and more are all working on this type of craft for use in this kind of city-based short-hop transit for both people and cargo.

The sizeable investment made by Toyota in this round is a considerable bet for the automaker on the future of air transportation. In a press release detailing the round, Toyota President and CEO Akio Toyoda indicated that the company is serious about eVTOLs and air transport in general.

“Air transportation has been a long-term goal for Toyota, and while we continue our work in the automobile business, this agreement sets our sights to the sky,” Toyoda is quoted as saying. “As we take up the challenge of air transportation together with Joby, an innovator in the emerging eVTOL space, we tap the potential to revolutionize future transportation and life. Through this new and exciting endeavor, we hope to deliver freedom of movement and enjoyment to customers everywhere, on land, and now, in the sky.”

Joby Aviation believes that it can achieve significant cost benefits vs. traditional helicopters for short aerial flights, eventually lowering costs through maximizing utilization and fuel savings to the point where it can be “accessible to everyone.” To date, Joby has completed sub-scale testing on its aircraft design, and begun full flight tests of production prototypes, along with beginning the certification process for its aircraft with the Federal Aviation Administration (FAA) at the end of 2018.

 


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China Roundup: TikTok receives most government requests from India and US

19:00 | 5 January

Hello and welcome back to TechCrunch’s China Roundup, a digest of recent events shaping the Chinese tech landscape and what they mean to people in the rest of the world. This week, TikTok, currently the world’s hottest social media app, welcomed the new decade by publishing its first transparency report as it encounters rising scrutiny from regulators around the world.

TikTok tries to demystify 

The report, which arrived weeks after it tapped a group of corporate lawyers to review its content moderation policy, is widely seen as the short video app’s effort to placate the U.S. government. The Committee on Foreign Investment in the United States, or CFIUS, is currently probing the app for possible national security risks.

TikTok is owned by Beijing-based tech upstart ByteDance and has been rapidly gaining popularity away from its home turf, especially in the U.S. and India. As of November, it had accumulated a total of 1.5 billion downloads on iOS and Android devices, according to data analytics firm Sensor Tower, although how many materialized into active users is unknown.

The transparency report reveals the number of requests TikTok received from local regulators during the first half of 2019. Such orders include government requests to access user information and remove content from the platform. India topped the list with 107 total requests filed, followed by the U.S. with 79 requests and Japan at 35.

The numbers immediately sparked debates over the noticeable absence of China among the list of countries that had submitted requests. This could be because TikTok operates as a separate app called Douyin in China, where it claimed to have more than 320 million daily active users (in Chinese) as of last July.

TikTok has taken multiple measures to ease suspicions of international markets where it operates, claiming that it stores data of U.S. users in the U.S. and that the app would not remove videos even at the behest of Beijing’s authority.

Whether skeptics are sold on these promises remains to be seen. Meanwhile, one should not overlook the pervasive practice of self-censorship among China’s big tech.

“Chinese internet companies know so well where the government’s red line is that their self-regulation might even be stricter than what the government actually imposes, so it’s not impossible that [the TikTok report] showed zero requests from China,” a person who works at a Chinese video streaming platform suggested to me.

It’s worth revisiting why TikTok has caused a big stir on various fronts. Besides its nationality as a Chinese-owned app and breathtaking rise, the app presents a whole new way of creating and consuming information that better suits smartphone natives. It’s been regarded as a threat to Facebook and compared to Youtube, which is also built upon user-generated content. However, TikTok’s consumers are much more likely to be creators as well, thanks to lower barriers to producing and sharing videos on the platform, venture capitalist David Rosenthal of Wave Capital observed. That’s a big engagement driver for the app.

Another strength of TikTok, seemingly trivial at first sight, is the way it displays content. Videos are shown vertically, doing away the need to flip a phone. In a company blog post (in Chinese) on Douyin’s development, ByteDance recounted that most short-video apps budding in 2016 were built for horizontal videos and required users to pick from a list of clips in the fashion of traditional video streaming sites. Douyin, instead, surfaces only one video at a time, full-screen, auto-played and recommended by its well-trained algorithms. What “baffled” many early employees and interviewees turned out to be a game-changing user experience in the mobile internet age.

Douyin’s ally and enemy 

A recent change in Douyin’s domestic rival Kuaishou has brought attention to the intricate links between China’s tech giants. In late December, video app Kuaishou removed the option for users to link e-commerce listings from Taobao, an Alibaba marketplace. Both Douyin and Kuaishou have been exploring e-commerce as a revenue stream, and each has picked its retail partners. While Kuaishou told media that the suspension is due to a “system upgrade,” its other e-commerce partners curiously remain up and running.

Left: Douyin lets creators add a “shop” button to posts. Right: The clickable button is linked to a Taobao product page.

Some speculate that the Beijing-based company could be distancing itself from Alibaba and moving closer to Tencent, Alibaba’s nemesis and a majority shareholder in Kuaishou. Yunfeng Capital, a venture firm backed by Alibaba founder Jack Ma, has also funded Kuaishou but holds a less significant equity stake. That Douyin has long been working with Alibaba on e-commerce might have also been a source of discordance between Kuaishou and Alibaba.

 


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Tesla surpasses 2019 goal and delivers 367,500 electric vehicles

18:27 | 3 January

Tesla said Friday that it delivered 367,500 electric vehicles in 2019 — 50% more than the previous year — a record-breaking figure largely supported by sales of the cheaper Model 3.

More than one-third of those deliveries — about 112,000 vehicles — occurred in the fourth quarter.

The electric automaker reported production also grew 10% from the previous quarter to 105,000 vehicles.

The results pushed shares up 3.8% in trading Friday morning.

The fourth quarter caps a year that started poorly for Tesla. The company delivered just 63,000 vehicles in the first quarter, nearly a one-third drop from the previous period. The low first-quarter delivery numbers signaled what was to come: wider-than-expected loss of $702 million driven by disappointing delivery numbers, costs and pricing adjustments to its vehicles.

However, the company then rebounded, delivering 95,200 vehicles in the second quarter and then 97,000 electric vehicles in the third quarter.

The positive report comes as Tesla ramps up production of Model 3 vehicles at its new factory in China. Earlier this week, more than a dozen Tesla employees took delivery of the Model 3.

The first public deliveries of Model 3 sedans produced at its Shanghai factory will begin January 7, one year after Tesla began construction on its first factory outside the United States.

Tesla said that it has produced “just under 1,000 customer salable cars and have begun deliveries” in China. “We have also demonstrated production run-rate capability of greater than 3,000 units per week, excluding local battery pack production which began in late December,” the company added in its report.

 


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Made in China: Tesla Model 3 deliveries to Chinese customers to begin January 7

21:32 | 2 January

The first deliveries of Tesla Model 3 sedans made in China will begin January 7, one year after the U.S. automaker began construction on its first factory outside of the United States.

The deliveries to customers — which Reuters was first to report the news based on confirmation from a Tesla representative — is a milestone for Tesla as it tries to carve out market share in the world’s biggest auto market as well as lessen the financial pain caused by tariffs. Deliveries to customers will occur at the Shanghai factory. Earlier this week, more than a dozen Tesla employees took delivery of the Model 3.

“We believe China could become the biggest market for Model 3,” the company said in its third-quarter earnings report.

Producing vehicles in China for Chinese customers allows Tesla to bypass tariffs, but it’s no guarantee that this will be the revenue-generating boon the company needs to push itself into sustained profitability. EV sales have been sluggish for other automakers in China over the past several quarters as the government has rolled back subsidies on new energy vehicles.

The company and its CEO Elon Musk are jumping into the market with gusto, despite gloomy EV sales. Tesla has said the production line at the factory in China will have a capacity of 150,000 units annually and will be a simplified, more cost-effective version of the Model 3 line at its Fremont, Calif. factory.

Tesla China Model 3 parking lot

Aerial photo of Tesla factory in New Lingang District, Shanghai. The number of Model 3 cars in the parking lot is about 500.

Tesla also said this second-generation Model 3 line will be at least 50% cheaper per unit of capacity than its Model 3-related lines in Fremont and at its Gigafactory in Sparks, Nevada.

Tesla struck a deal in July 2018 with the Chinese government to build a factory in Shanghai. It was a milestone for Tesla and CEO Elon Musk, who has long viewed China as a crucial market. And it was particularly notable because China agreed for this to be a wholly owned Tesla factory, not a traditional joint venture with the government. Foreign companies have historically had to form a 50-50 joint venture with a local partner to build a factory in China.

Chinese President Xi Jinping has pushed forward plans to phase out joint-venture rules for foreign automakers by 2022. Tesla was one of the first beneficiaries of this rule change.

The opening of the China factory comes at a time of rising trade tensions between China and the United States. Tesla has been particularly exposed to relations between China and the U.S., and the resulting rising tariffs. Tesla builds its electric sedans and SUVs at its factory in Fremont, Calif. and ships them to China, which subjects the vehicles to an import tariff.

 


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It need to be taxed also any organic substance ie food than is used as a calorie transfer needs tax…
Peter Short

Twitter Is Testing A Dedicated GIF Button On Mobile
Peter Short
Sounds great Facebook got a button a few years ago
Then it disappeared Twitter needs a bottom maybe…
Peter Short

Apple’s Next iPhone Rumored To Debut On September 9th
Peter Short
Looks like a nice cycle of a round year;)
Peter Short

AncestryDNA And Google’s Calico Team Up To Study Genetic Longevity
Peter Short
I'm still fascinated by DNA though I favour pure chemistry what could be
Offered is for future gen…
Peter Short

U.K. Push For Better Broadband For Startups
Verg Matthews
There has to an email option icon to send to the clowns in MTNL ... the govt of India's service pro…
Verg Matthews

CrunchWeek: Apple Makes Music, Oculus Aims For Mainstream, Twitter CEO Shakeup
Peter Short
Noted Google maybe grooming Twitter as a partner in Social Media but with whistle blowing coming to…
Peter Short

CrunchWeek: Apple Makes Music, Oculus Aims For Mainstream, Twitter CEO Shakeup
Peter Short
Noted Google maybe grooming Twitter as a partner in Social Media but with whistle blowing coming to…
Peter Short