Tesla's China Suppliers Sink as Factory Timeline Disappoints

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(Bloomberg) -- Chinese companies that supply Tesla Inc. fell Thursday after Elon Musk indicated his pioneering electric car firm won’t start making vehicles in the world’s largest auto market this decade.

Beijing Zhongke Sanhuan High-Tech Co., which said last year that it signed a three-year agreement to supply parts to Tesla, closed down 2.6 percent in Shenzhen. Shanghai-listed Ningbo Joyson Electronic Corp., which identified Tesla as a customer in its 2016 annual report, pared its 3.2 percent loss to 0.6 percent. Fellow suppliers Dongguan Eontec Co. slid 4.4 percent and Lens Technology Co. fell 1.7 percent.

The losses came after Musk, Tesla’s chief executive officer, said during an earnings call late Wednesday that the firm is about three years away from starting production in China. After Tesla said in June it was working with the Shanghai government to explore local manufacturing, some investors had been speculating U.S. President Donald Trump’s visit to China next week could herald news of a deal, said Dai Ming, a fund manager with Hengsheng Asset Management Co. in Shanghai.

“The investor frenzy has cooled down,” Dai said by phone. “Three years is definitely longer than most had expected.”

Some market players were expecting an announcement that work on a Chinese plant could begin as soon as next year, said Guo Feng, head of wealth management department at Northeast Securities Co. in Shanghai.

“Don’t set your watch by this,” Musk told an analyst, saying the three-year timeframe was a “rough target.” Tesla will probably make the Model 3 sedan and Model Y crossover in China and won’t build the pricier Model S or Model X there, he said. 

©2017 Bloomberg L.P.

With assistance from Amanda Wang, Amy Li

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