Elon Musk said sales of electric Model S cars in China should match U.S. levels as early as next year, with demand from the world’s largest auto market eventually requiring a local plant.
The electric-car maker said yesterday the Model S will be priced from 734,000 yuan ($121,280) in China when deliveries begin.
For Tesla, “it could be as big as the U.S. market, maybe bigger. I don’t want to get overexcited about it,” Musk said yesterday. “Even without building there locally, it’s always going to be the second-biggest market after the U.S.”
China’s market accounted for estimated sales of roughly 20 million vehicles [all cars and light trucks] compared to roughly 15.6 million units in the U.S. market. By 2020, those numbers are expected to reach as high as 32 million in China compared to a mature U.S. market that could reach around 17 million.
Tesla sold 6,900 cars in the 4th quarter of 2013.
Tesla facing trouble in meeting the growing demand for its Model S. The auto maker is working on overcoming this limitation. The firm extended its agreement with Panasonic, last year in November, whereby it will supply about 2 billion automotive grade lithium-ion battery cells to the firm for the next four years. This is sufficient to produce around 300K cars [about 75000 cars per year on average, but about 40K this year and 100K in later years]. Tesla Motors also might open a battery giga factory to increase cell production.
Tesla is projected to produce 100,000 cars in 2016 Tesla would need to produce 200,000 Model S and Model X vehicles and 600,000 Gen IIIs in 2020 to maintain its stock position.
The price of Tesla’s flagship Model S in China, a version equipped with a premium 85 kilowatt hour battery pack, puts it in the same bracket there as Volkswagen AG (VOW)’s Audi S5 sedan and Bayerische Motoren Werke AG’s 5-series GT sedan, according to Autohome, a car-pricing website. It’s also 50 percent more expensive than in the U.S., where the equivalent model sells for $81,070, according to a Tesla statement.
Since the Model S is imported to China from California, a duty of as much as 25 percent is added to the price tag, Musk said. The company also must cover shipping costs and taxes. Tesla could have charged more than $160,000 had it followed standard industry practices.
“They’re basically calling us huge idiots for not ripping off customers in China.” Musk said. “I don’t think ripping off customers is a good long-term strategy.”
Tesla’s entry is also being closely watched by other automakers that have been trying to convince local consumers that electric vehicles are worth the hassle. China is lagging behind its target to have 5 million alternative energy-powered vehicles by 2020 because of a lack of charging stations and high costs, even amid mounting concerns over worsening air pollution.