Tesla Motors, Inc. (TSLA) has set its sights on capturing the world’s largest automobile market: China. About a month after opening it first showroom in the nation, the electric car maker has launched its Chinese website, Tousule.cn.
Chinese consumers can book the Tesla Model S through the site by paying a reservation fee of RMB 250,000 ($41,000). Deliveries of the car in China are expected to begin in the first quarter of 2014.
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Tesla is also offering reservations of Model X in China through the new website. Deliveries of the car are projected to start in the U.S. from 2014.
Tesla started reservations of Model S in China in Aug 2013. Last month, the company opened its first Chinese showroom at the exclusive Parkview Green mall in Beijing. The company also has a page on the Chinese microblogging platform Sina Weibo.
According to the China Daily, Tesla Model S will be priced in the range of $146,000–$200,000 in China, compared with $71,000–$120,000 in the U.S. and $98,000–$162,000 in Europe. This significant difference in pricing is the result of high taxes imposed on imported goods in China.
However, Tesla plans to offer various incentives to Chinese consumers to counter the steep pricing. The efficient safety features and environment friendly nature of Tesla’s cars are expected to attract consumers in China. Some of the largest cities in the nation, such as Shanghai and Beijing, are very polluted and the Chinese government is trying to reduce sales of vehicles that emit greenhouses gases. Moreover, the country witnesses huge demand for luxury vehicles, which is expected to benefit Tesla.
However, the Chinese government is providing support to Chinese manufacturers like BYD and Kandi to build electric cars, which will provide competition to Tesla. Moreover, the nation does not have adequate charging infrastructure, which will affect the sale of electric cars.
Nevertheless, Tesla expects to sell about 5,000 cars per annum in Asia. Apart from China, the automaker recently opened the booking for Model S and Model X in Japan. However, sales in the continent can be much higher if the cars become popular in China.
Tesla estimates delivery of a little less than 6,000 Model S vehicles in the fourth quarter of 2013 and 21,500 vehicles globally in 2013. The automaker expects Model S sales to cross 40,000 by 2014, assuming the demand in Asia and Europe meet expectations.
Tesla currently has a Zacks Rank #4 (Sell). Better-ranked automobile stocks include Honda Motor Co., Ltd. (HMC), Fuji Heavy Industries Ltd. (FUJHY) and Ford Motor Co. (F). All these stocks carry a Zacks Rank #2 (Buy).