Tesla Motors Inc (NASDAQ:TSLA) is expecting to increase its sales two-fold in 2014, from 23,000 to 24,000 units estimated for 2013, spokesperson Veronica Wu told Reuters. A few weeks back, Jerome Guillen of Tesla said that the fourth quarter sales were 6,900 units, which would help the company Tesla to easily achieve the set target of 20,000 units for 2013.
Focus on pricing
Wu re-established the previous comments of CEO Elon Musk, where he said that the company expects China to contribute 30 to 35% sales of this year. Tesla Motors is planning to open 10 to 12 stores in Chinese cities by the end of 2014.
Wu said that Tesla Motors Inc (NASDAQ:TSLA) is not planning to build any plant in China, as of now, rather focusing more and more on the pricing strategy, making a good car and up to date service network to satisfy the Chinese customers.
Previously, Tesla Motors Inc (NASDAQ:TSLA) announced that it is looking forward to a grand reception in China similar to what it experienced in the United States. The price of the Model S is kept at 734,000 Yuan or around $121,280, which is 50% higher compared to the United States. In China, the price of the Model S is more due to higher taxes and other charges. In China, the Model S bears the shipping cost of $3,600, custom duty and taxes of $19,000 and value added tax of $17,000. If these prices are deducted then, the price would reach a similar level as in the United States.
A bold move from Tesla
Tesla Motors Inc (NASDAQ:TSLA) reinstated that the competitors would try to put Tesla in a bad light by telling the customers that price in China is low because the car is not worth the high price, but in reality these luxury cars earn double the profit per car in China compared to the United States or Europe. Moreover, the company has not spent much on the advertising, but the demand has scaled high for its much-coveted Model S.
Tesla Motors Inc (NASDAQ:TSLA)’s decision to lower the price of the Model S in China comes as a bold strategy from the not so experienced car maker. It will be interesting to see whether the move will pay off for Tesla or backfire, and how other luxury car makers react will also be worth watching.
