Visitors wearing face masks check a China-made Tesla Model Y sport utility vehicle at the electric vehicle maker's showroom in Beijing on January 5, 2021. (Photo: Agencies)

Tesla Inc is searchingfor a design director in China, part of efforts to open a"full-function" studio in Shanghai or Beijing and designelectric cars tailored to Chinese consumer tastes, according tothree people with knowledge of the matter.

The US carmaker's human resources managers, as well asseveral headhunters, have been trawling the industry over thepast four months, the sources said.

They are looking for "bi-cultural" candidates with 20 ormore years of experience who are familiar with Chinese tastesand can bridge the gaps between China and the United States,they added.

Some candidates have been interviewed by Tesla's globaldesign chief Franz von Holzhausen, according to the people,though it was not clear how many potential candidates had beenapproached by the company and recruiters.

All three sources spoke to Reuters on condition of anonymitydue to the sensitivity and confidential nature of the matter.

Tesla and von Holzhausen did not respond to e-mailed requestsfor comment.

China is the world's biggest auto market, plus the largestfor all-electric vehicles with sales volumes expected to reachroughly 1.5 million vehicles there this year, according toconsultancy LMC Automotive. It is also Tesla's No.2 market afterthe United States.

The carmaker's plans for the design studio are not fullydeveloped, and the sources believe Tesla will likely wait formore clarity on strained US-China relations under a new USpresident before making a final decision on the move and all itsdetails.

The talent search, which the sources said was mainly focusedwithin China, fits with comments from Tesla boss Elon Musk earlylast year.

"I think something that would be super cool would be ... tocreate a China design and engineering center to actually designan original car in China for worldwide consumption. I think thiswould be very exciting," he said at a media event in Shanghai.

Flurry of activity

Musk's interest in developing cars in China is part of abroader push by Tesla to boost the company's global sales volumewell past the 500,000-vehicle-a-year mark, which it came just450 short of hitting in 2020.

All three sources said Tesla's search for a China studiodirector began around September, and that there was a flurry ofactivity as recently as December when a number of headhuntersused LinkedIn and other means to approach candidates.

One of the sources, who has knowledge of Tesla's headhuntingactivities in China, said that once a design director was hired,Tesla would recruit the director's team which would likely bearound 20-strong and include designers plus modellers who helpturn design renderings into clay models.

All the sources said the planned center aimed to be acomprehensive design outfit, with one describing it as a"full-function studio," which would not only help conceptualizethe design of a car but also come up with the final shape –digital three-dimensional data – of a model.

The data could then be handed over to Tesla's vehicleengineers, who are mostly based in northern California.

Two of the sources said Tesla's China studio would likelyalso carry out research on Chinese consumer tastes, as well aswork for cars expected to be produced at Tesla's vehicleassembly plant in Shanghai, where designs are tweaked to makesure specific components fit within engineers' specifications.

"They want to give vehicle design a lot more bias towardChina; they have already done a lot here, setting up a majormanufacturing site and having sold a ton of EVs, but it seemsTesla's ready to put roots down," said one of the sources.

This push might lead to a more independent Tesla China,added the person, who has spent more than a decade in thecountry working at design centers run by global automakers,among other places.

Chinese consumers bought around 145,000 Tesla vehicles lastyear, accounting for roughly a third of the company's overallglobal volumes, LMC said.

US$25,000 electric car

Two of the sources said one likely "China-specific" modelwas a lower-cost volume generator such as a US$25,000 electric carthat Musk referred to at a Battery Day event in September, whichhe said Tesla might aim to bring to market in about three years.

Musk said Tesla was confident it would be able to hit themarket with "a very compelling US$25,000 electric vehicle that'salso fully autonomous."

At that price, according to two of the sources as well asindustry experts, it was likely to be a compact car, smallerthan Tesla's Model 3, which would be as affordable as somemainstream gasoline-fueled vehicles.

Compact cars are not big sellers in the United States wherebigger, taller vehicles such as Ford's F-150 pickup truck andSUVs, as well as midsize sedans, rule the road.

They account for about 10 percent of America's overall vehiclemarket. By contrast, compacts make up 25 percent of sales in China, oraround 5-6 million cars a year, according to consultancy LMCAutomotive.

That's why the planned US$25,000 car Musk has discussed wouldbe better suited to the China marketplace, according to the twosources and industry experts.

"A compact Tesla car would do well in China, as well as therest of Asia and Europe," said Yale Zhang, head ofShanghai-based consultancy Automotive Foresight. "It couldpotentially put a serious dent in sales of cars like Toyota'sCorolla and the Volkswagen Golf."