Tesla’s China suppliers sink as factory timeline disappoints

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

Beijing Zhongke Sanhuan HighTech Co, which said last year that it signed a three-year agreement to supply parts to Tesla, closed down 2.6% in Shenzhen. Shanghai-listed Ningbo Joyson Electronic Corp, which identified Tesla as a customer in its 2016 annual report, pared its 3.2% loss to 0.6%.

Fellow suppliers Dongguan Eontec Co slid 4.4% and Lens Technology Co fell 1.7%.

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 US 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.