We have word that Tesla has created a new energy company in China and it is being headed by Tom Zhu.
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Tesla - New Energy Company
Tesla is making a new Energy company in China, according to nasdaq.com, and this new Energy company is going to be led by Tom Zhu, Elon Musk's right-hand man and SVP of automotive for Tesla.
This new company is fully owned and operated by Tesla and all of its profits and revenue will be attributed to Tesla, in my opinion. It wouldn't make sense for Tesla to spin off a company that is its own entity that isn't part of Tesla, the publicly traded company with stock.
There wasn't much additional news about this new energy company, but I have a lot of thoughts on why Tesla did it and what the advantages are to doing it. First off, Tesla would not have done this if there weren't reasons of benefit for doing so.
I think the primary benefit is that this company will better be able to fit into the structure of China and the currency there. By having a company that is created in China, it will most likely fit better with rules and regulations there regarding companies.
Second, the company has some detachment from Tesla and can most likely operate in ways that don't exactly have to conform with Tesla and being in China. What those reasons are, I'm not sure, but China is a completely different "animal" than the U.S. and having an entity that can work with that is important.
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Will Tesla Make More of These?
Will Tesla make more of these energy or even automotive entities in other countries? I think it's possible. Some other locations that I can think of where Tesla might do this include India and possibly some South American countries.
Tesla will only do this if there are legal, cultural, economic, or operational advantages to doing so. Otherwise, why do it?
Tesla could just operate as Tesla Energy there, but again, there are various advantages to Tesla making a new company that have caused them to do this. Tesla has a great management team and I trust that they know what they are doing.
Some are worried about Tesla in China, due to China being such a different country than the United States, but I think a good product at a good price will have a place anywhere in the world. If Tesla makes the best cars and energy, there will be demand anywhere in the world if it can be afforded.
Why do you think Tesla made this new company?
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Jeremy Johnson is a Tesla investor and supporter. He first invested in Tesla in 2017 after years of following Elon Musk and admiring his work ethic and intelligence. Since then, he's become a Tesla bull, covering anything about Tesla he can find, while also dabbling in other electric vehicle companies. Jeremy covers Tesla developments at Torque News. You can follow him on Twitter or LinkedIn to stay in touch and follow his Tesla news coverage on Torque News.
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