Tesla in China

Tesla in China

It seems that TM has delayed to open its Santana Row like show room in Beijing, China until later 2013, instead of the originally planned opening of this Spring. China's Global Time has recently reported that TM will show Model S at September Chendu Auto Show in China followed by the opening of TM's first China show room. Lately Tesla has become a quite popular name in China, not only in Chinese auto industry circle but also among common Chinese consumers. The news about Tesla has also widely read among Chinese media. However, for most Chinese, Tesla MS represents only a remote story of the Silicon Valley innovative technology in the form of an amazing fancy car. Sadly, most Chinese auto experts do not even believe that TM has much future in the China market taking into the consideration of Chinese consumers' view on EV and EV charging infrastructure, among other factors. Chairman of BYD, the largest Chinese own EV auto maker, at recent shareholder meeting once said "if the Chinese consumers and their families are ready, BYD can make "several" Tesla Motors in minutes." I think what he really meant was that though China is the largest auto market in the world, China is not ready for EV and EV auto makers would face huge challenges in the China market.

Thus, my question is that, besides the TM presence in China for the marketing purpose, how realistic is it to TM that TM can sell MS or Model X in China that can be as significant as that TM sells them in Europe in the next two years?

lbjack | 9 giugno 2013

Same concern of the analysts, which elicited a hilarious comment:

"Tesla Motors moves forward with a plan to open a store in China, despite doubts from analysts that the automaker can make a strong presence in the nation. Though the Chinese government is getting more serious in offering subsidies for electric vehicles, the price tag on the Model S and the lack of charging station infrastructure are concerns."

Yeah, like we care what the analysts think at this point because they've been...what? to date?
Model S is vaporware.
No one will buy a luxury EV.
Once the early adopters have purchased, demand will drop off.
Tesla will never ramp up
Tesla will go bankrupt.
Tesla is overvalued at $30, $40, $50.
Tesla stock will fall back down to earth here in another day or so.
We're not sure putting a Tesla store in China is a good idea

GeirT | 9 giugno 2013

What the Chairman of BYD say is irrelevant. He tries to protect his own turf where he has not succeeded.

China is totally ready for MS. Average driving is city range anyway thus the 300 miles is more than enough so no worry about range. Price is a non-issue. I think China is the largest customers for all the luxury brands; Rolls Royce, Bentley, the Italians, Mercedes, Porsche...

China is THE country of Nouveau Riche and they have money to burn. And are in a huge number. TM don't need to sell millions of cars, 5,000 - 10,000/year is good enough at least for now and it is doable. No doubt about it.

As for EV implementation - may I remind you that all scooters, mopeds and the like all are EV or LNG running. If any nation can change fast, it is China. And being presented as high fashion and superb design - it will be done over night.

And don't forget Taiwan either. 24 million people on this small island. The size is perfect for the MS range about 425 km north-south. The target market big enough for a few thousand cars a year, at least. Mercedes, BMW, Porsche etc. Even Bentley and Rolls Royce have their outlets here, Maserati and Ferrari too.

I have worked in the region for 30 years, have lived here for soon 15 years and have seen the explosion in purchasing power, the general eagerness to follow fashion and acceptance of (reasonable) risk that in my mind China/Taiwan/Hong Kong/Singapore should be easily primary markets in my mind.

But I am biased of course ;-)

lbjack | 9 giugno 2013

GeirT . . .

Hong Kong, Taiwan, Singapore -- yes! Totally natural markets for Tesla.

And if what you says is right, about most of the China being for commuters, then Tesla is it. In fact, if the bosses in Peking should want to showcase their commitment to clean air, what better way than to decree no more ICE cars? So, all the rich guys just switch to Teslas, while the ICE makers are scrambling to come out with full-size MB, BMW and Porsche EVs. Cool!

The only impediment is whatever bribes BYD might pay to keep Tesla out of China.

GeirT | 10 giugno 2013

@ lbjack

:-)) BYD may be an issue but who cares. MS design is fantastic compared to what they shall ever be able to make, battery quality as well. There is not enough money in the world to bribe Tesla to not enter this market. Besides, China is not as bad as many would think. Rule of law is gradually seeping in with internationalisation. You'll be amazed compared to only a few years ago. I think many more countries similar to ours are even worse... but that is another discussion.

Wealthy Chinese know how to appreciate quality and design! Make no mistake about it. And they pay whatever it takes to get the best. And they are very many. I read one place that there are more USD millionaires in China than in Europe combined. Who can afford to stay away from this market?

As to BYD... sorry to say but China don't even manage to provide milk powder without toxins and melamin! And did anybody read about 20,000 pigs floating down Huangpu river due to diseases. Wjat about Beijing where air pollution is so bad people has to be home (just like in Germany's Rugh Gebiet in the 70-ies)

Quality in China is a "flexible" thing. Tesla - as other imports - show no flexibility in quality what so ever. Chinese know that. Besides, being rich requires means to show it and what is more natural than an electrical "rocket"?

Tesla will be a sure winner! No doubt about it

And in Taiwan too ;-)

ghillair | 10 giugno 2013

This is an interesting read on the EV market in China. Among other things note that they plan to spent $400 billon over the next 4 years to improve the Electric grid for EV charging.

blackscraper | 10 giugno 2013

Well, as I am an immigrant, I think TM will have a hard time in China. Not from the local government (at least main hurdle would not be from government), but from Chinese consumers who are so "brand-name-aware". They would certainly opt for some gas guzzling exotic vehicles rather than an exotic Telsa model S. TM will have a tough time in China including Hongkong and Taiwan. Whereas the rest of the world, especially in European, TM should just do fine.

lbjack | 10 giugno 2013

GeirT, actually, it wouldn't be bribing Tesla to stay out, which would be impossible, but BYD and/or others bribing the government to keep Tesla out.

carlk | 10 giugno 2013

Elon himself has said China is a wild card. I agree with GeirT China, along with other countries mentioned, have the potential to be a huge market for Tesla. I don't think people there have any particular hang ups on MB, Porsche or the Italians. Those are all pretty new to them anyway.

Mel. | 10 giugno 2013

GierT, with China buying Smithfield Foods, will that be a place to send those 20,000 pigs?

Mike C | 10 giugno 2013

Tesla will not have a problem in China. Chinese love American brands, look at the money that has been made importing Levi's, Apple products, etc. Not to mention the Model S is simply a superior product. People with enough money will buy it if it's available, it doesn't matter where in the world it is.

GeirT | 11 giugno 2013

@ blackscraper - you are dead wrong!
@ ghillair - told you so. Things move and move fast in this neck of the woods...
@ lbjack - good point. The rest of us could get our cars faster (Norway for me...)
@ carlk - It is all about what is perceived "in" and there is a lot of buzz in Taiwan right now.
@ Mel - you pick'em up from Huangpu, they are all yours...
@ Mike C - Spot on!


zallen99 | 27 luglio 2013

BYD is not in the same league as Tesla...not even close. BYD in China are very low-end entry level vehicles. Most, in fact, are near perfect copies of other manufacturer models.

I live in China, and have been living/working here for about 5 years now.

Tesla will have no issue to sell in China, assuming they can successfully navigate the logistics of CCC certification, importation, and financial regulations.

Challenges will be charging infrastructure. They will, obviously, be limited in expansion to where they can install charging stations. This leaves Beijing as the logical near term market limit. That said, Beijing is huge, sprawling to the n-th degree is all directions. Where to install stations in a city with no core routes? The US is, more or less, built along the national highway system. Beijing is more of a hub and spoke type design, with more than 7 massive ring roads circling the city. Locating the charging stations will be a huge challenge, and investment.

Long-term challenge and opportunity: the GB ("guo biao," or national standards). China will, most likely, institute a GB directive to standardize electric vehicle charging outlet size/shape and capacity. If Tesla can lobby the GB authorities effectively, they may get their own design integrated into the standard, which I would mean the super chargers could even be used on BYD cars, among others. Tesla could be the resource distribution company for electric car charging, like ExxonMobil and Phillips 66 did for gas stations across the US. New business unit of Tesla???

Regarding price: importing the car will immediately require a 25% import duty, required on all imported vehicles. Other taxes will certainly apply. This car, price wise, will most likely be effectively equivalent to the Maserati Sedans, and big body BMW 7s, Panameras, and the like. It will certainly be a status symbol, but all of this will certainly depend on the charging infrastructure investment.

Keith72 | 27 luglio 2013

I spend about half my time in China, mostly in Shanghai and Nanjing. In both those areas, the Chinese love high end cars. I'm shocked at how affluent Nanjing has become, and you'll see every high end manufacturer on the planet in Nanjing. There's a big Lamborghini store right in the middle of downtown. I see Bentleys, Rolls Royce, Aston Martin, Porsche vehicles all the time. There's a huge market for luxury vehicles. Probably the most popular is BMW, which Tesla has targeted in the US. The difficulty for EVs is that most people live in high rise type accomodations and there are no personal garages to use for charging - a problem for the upper middle class, but not for the rich. China could install the infrastructure almost overnight in select cities if they wanted to. There have been discussions reported within the government that they see EVs as a way to attack the air quality issues in Beijing and Nanjing. For cars not made in China there is a hefty import duty (I think it's much higher than the 25% mentioned above), but the rich pay it anyway. They love western toys!!

bradslee | 28 luglio 2013

Please see the article published on San Jose Mercury New on July 27:

So far no idea when Tesla Beijing Showroom will officially open. Up to June 23, 2013, Chinese sources have reported that the delay is due to the Chinese governmental approval process. However, people could see through the covered glass door at the site and see three Tesla Model S are already in the showroom. Outside the showroom, a huge white Tesla Model S picture covers entire showroom wall with "Go Electric" words on it.

China Global Time has reported that Tesla will show Model S at September Chendu Auto Show in China followed by the opening of Tesla's first China showroom.

Velo1 | 28 luglio 2013

6 years ago I few to Shanghai for work. The client said a limo would pick me up at the airport. As I was clearly immigration I began wondering what a Chinese limo might look like. After meeting the driver and walking through the parking area, we approached a black Buick Regal. I was later told that car is the status symbol for high-end limos, and most desired by Chinese high income people.

I bet the Model S will replace that standard soon.

jamesd567 | 28 luglio 2013

I have been to china many times. Asians, and particularly chinese are highly status conscious. They will love the Tesla S model and they will want it because it represents high class and state of the art. Its the same with an iPhone. Chinese get what they can afford, but they will all tell you they want the iPhone.

Tesla is smart to start in Hong Kong, which leads the chinese demand. Believe me, there is no possibility of range anxiety in Hong Kong.

JPPTM | 28 luglio 2013

At Teslive, George B was at the factory party Saturday evening and talking with a group of us. Interesting dynamic in China. Beijing showroom will be the first. This might not make economic sense, but it was politically expedient. Showroom/store intentionally large to allow special events (cultural, music, etc). Cash transactions require high tech bill counting machinery that detects forgeries. Cultural issues re who actually drives car in China (chauffeur/driver might be 'preferred' but future owners there very interested in driving their own Model S).

BTW, he would love to be able to sell a 40kWh car in Hong Kong--as jamesd567 noted, no range issues.

Cindy I II III | 29 luglio 2013

It's up to the Chinese government. If it wants to support Tesla and EV in Beijing, just post a policy that EV cars can drive any day of the week. The story I was told was that in Beijing only cars with odd or even numbers of license plate can drive certain days of the week. It was meant to limit the number of cars on the road. Many went out and bought another car.

@Velo1, yeah, it's funny to see how successful Buick is in China. Once I saw Buick bill board in Shanghai:"Business class on land"

Given how polluted Beijing is right now, it's not hard to imagine how sensibly cool Tesla is running next to the Maserati of the world on the street of Beijing. All celebs should get one :-)

deric | 29 luglio 2013

hey guys, according to my friend in Hong Kong, Tesla has been sold more than 300 units there (there will be couple hundreds of TMS running in a small island)!!! On the other hand, months ago there were couple BYD taxi running in HK but after battery charging accidents happened there, no one wants to place bet on BYD...

My friend in HK is still waiting his "Performance Signature" (P85+)...the car should be arrived to HK around fall/winter this year. Now he keep admiring mine in L.A. hahahahahahhaha

GeirT | 2 agosto 2013

Tesla Motors Inc. Is Planning Something Big In China

August 2nd, 2013

Tesla Motors Inc. (NASDAQ:TSLA) is planning something big for the world’s biggest market – China. This looks the right time for the electric carmaker to enter the Chinese market where the government is trying to reduce the sale of vehicles that emit greenhouses gases and the luxury vehicles become increasing popular among the Chinese buyers. The company CEO Elon Musk described the move as a “wild card” in the company’s future.

Tesla plans to open its first showroom in central Beijing at the exclusive Parkview Green mall later this year. It would be an 8,000-square-foot showroom, roughly three times the size of its U.S. showrooms.

However, TSLA would face challenges strengthening its base in the country, mainly due to the lack of charging infrastructure. Moreover, its flagship car Model S would be subject to import and luxury taxes in the country, which would push up its already steep price.

[Comment: with the 300 miles range and taken the city use I don't see this to be a major issue as owners in China as elsewhere will charge at home. A cross country tour is not feasible yet, but a Chinese Tesla owner for sure has a BMW or a Mercedes Benz parked in the garage as well.]

Many global automakers have shown interest in capturing the potential luxury vehicles market in China, which is dominated by European brands. Last month, General Motors Company (GM) broke ground for a $1.3 billion plant in China that will manufacture its popular Cadillac luxury model. GM aims to produce 160,000 vehicles annually from the plant.

In February, General Motors began producing Cadillac XTS sedan at a plant in Shanghai. GM plans to expand Cadillac’s dealer network to 200 by the end of the year from 69 last year despite sluggish sales, as it is optimistic about the long-term growth in the segment. Ford Motor Co. (F) also plans to introduce its Lincoln luxury lineup in China in the second half of 2014.

After months of sluggish growth owing to weak economic conditions and restrictions imposed by thegovernment on new vehicles, total vehicle sales in China reflected a steady growth of 11.2% in Jun compared with 9.8% in May, according to the China Association of Automobile Manufacturers (CAAM).

The steady growth in sales was mainly attributable to lower prices, which partially offset the effect of shortage of credit, weak economy and government restrictions on vehicle registration due to increasing traffic congestion and pollution in Chinese cities.

Timothy420 | 2 ottobre 2013

Elon Musk said the phrase "get ready for the Tsunami."
Tsunami Where does this word come from?

ORIGIN late 19th cent.: from Japanese, from tsu ‘harbor’ + nami ‘wave.’

So the word is asian and especially apt for what's about to change the world forever. Tesla's past stock prices are not the Tsunami that was just the forewarning of the Tsunami coming ahead from the asian market. America is just the side market. Think of it as testing grounds. Well if you think americans like their instant torque electric cars... What do you think the peoples republic of china is going to say about them. These people have seen devastation from pollution they want to have a clean planet and they know they are major contributors. Get ready for the tsunami...

lolachampcar | 2 ottobre 2013

yep, time to downgrade the stock :}