A few foreign automakers have gazed into the rear view mirror, wondering if they made the right choice on China’s car market.  Tesla is not one of them.  Mass deliveries of Tesla’s latest Model 3s started there this week. Founder Elon Musk’s high expectations for China are mirrored in Tesla’s share price. It has almost doubled in the past six months. Yet the valuations of its Chinese suppliers have yet to catch up.

Mr Musk did get some help from Beijing. Starting last month, and for the first time since 2015, electric cars using foreign-made batteries can receive Chinese subsidies. The inclusion in the government approved list of the Model 3, which reportedly uses batteries from Korea’s LG Chem, should accelerate Tesla’s sales. 

Cutting the Chinese sticker price helps too. Its China-built Model 3s will cost almost a tenth less, at about $46,000 before government handouts —closer to those of domestic rivals. Analysts expect Tesla’s China 2020 sales to nearly double from last year’s 16,360, driven by higher demand for the Model 3. China’s Model 3 sales should contribute more than 7 per cent of its global total. Tesla eventually expects an annual output of 500,000 cars from China.