Autos

China's hottest race: Creating the 'next Tesla'

It is the hottest story in the red-hot Chinese auto market.

Hundreds of millions of dollars are being spent by venture capital firms and other Chinese companies to create the next Tesla.

"The amount of money chasing this idea of being the next Tesla reminds me of the dotcom bubble back in 2000," said James Chao, who tracks the auto industry in Asia for the consulting firm IHS Automotive.

Jia Yueting, LeEco founder, gestures as he unveils an all-electric battery "concept" car called LeSEE during a ceremony in Beijing, China April 20, 2016.
Damir Sagol | Reuters

At least 10 VC firms or companies in China are investing in developing, building and eventually selling an electric car, said Chao.

LeEco is one of them.

The Chinese tech company, which used to be known as LeTV, has unveiled an electric autonomous-drive car called LeSEE.

The three coolest concept cars from the Beijing Auto Show
VIDEO0:4700:47
The three coolest concept cars from the Beijing Auto Show

When LeEco's Jia Yueting walked through the Beijing Auto Show, Chinese reporters swarmed around the 43-year-old CEO, who dressed like Facebook CEO Mark Zuckerberg, wearing a black hoodie zip-up sweater.

Yueting readily admits LeEco wants to build on Tesla's legacy.

"Tesla brings the auto industry into the electric era," he said. "Well, Eco wants to bring the industry into the Eco era."

It's easy to see why so many Chinese firms are betting big bucks on electric and autonomous drive cars.

China has already become the largest market in the world for EV sales, with 320,000 electric vehicles, including commercial ones, sold last year, according to IHS Automotive.

Chao said he expects that number will continue to grow because of government subsidies used to spur demand.

Jia Yueting, LeEco founder, poses for a photo in front of a logo of his company in Beijing.
LeEco CEO Jia Yueting says Apple is outdated
Tesla Model S redesigned and updated.
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"Those subsidies, which start at $8,500 and can go much higher, are a big reason many Chinese people decide to buy an electric vehicle," said Chao.

Could LeEco or another Chinese company be a threat to Tesla?

Near term, Chao is skeptical.

He pointed out that Tesla has a huge head start in the electric vehicle race thanks to to the Model S and Model X. In addition, Tesla has the plant and capacity in Fremont, California, and the gigafactory in Nevada supplying battery packs.

Perhaps the most important advantage Tesla has is its Chairman and CEO, Elon Musk.

Chao said he is a visionary leader who has not only disrupted the auto industry, but is rewriting the rules.