We reported just a few days ago that the electric car manufacturer Tesla Motors Inc (NASDAQ:TSLA) was eyeing a long-term approach in which ‘developing economies’ such as China would be central to its strategy. Well, further developments since then and statements issued by the company has given some indication of the extent to which this scheme is intended to develop over the next few years.
The upper echelons of Tesla’s management has been speaking over the past few days about their hopes for the Chinese market in the next twelve months. Veronica Wu, vice president of Tesla’s China operations, told Reuters that Tesla Motors Inc (NASDAQ:TSLA) intends to open in the region of a 12 stores in China by the end of this calendar year. This number includes the unit opened in Beijing a few months ago which Tesla considers to be a flagship store.
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China to drive Tesla growth
In accordance with this ambitious plan, Wu also stated that the company expects one-third of its global sales growth to come from China alone. The electric car specialist is hoping to achieve significant penetration into the Chinese marketplace owing to the fact that the rapidly industrialising nation is suffering from significant pollution issues. It is thought that on this basis the Chinese market will be one of the most fertile in the world for electric vehicles in the next few years.
Tesla Motors Inc (NASDAQ:TSLA) explained that the previous issues which it has experienced with regard to China have now been resolved, opening up this important market to their products. The company has been experiencing some difficulty owing to a trademark issue, but this quibble had now been resolved, ensuring that full entry into China was now achievable.
The issue centred around a trademark issue. A local businessman in China had registered the name “Te Si La” – the Chinese for Tesla – and had refused to budge on allowing Tesla to use it. Wu explained that the corporation had gone to court over the matter and managed to win, meaning that Tesla can use their appropriate Chinese name throughout the nation from now on. This is obviously a relief to the company, although hopefully the local businessman can still use it too!
Wu described Tesla Motors Inc (NASDAQ:TSLA)’s plans for the coming year as “very aggressive”, and the fact that she stated that Tesla is aiming to double its sales during 2014 from last year’s figures indicates how ambitious the targets are that they’ve set themselves. Wu expressed her confidence that these extremely challenging plans could be met, and also took time to reveal Tesla’s pricing strategy for its vehicles for the forthcoming year.
Tesla Model S success continues
The Model S has been a highly successful vehicle for Tesla Motors Inc (NASDAQ:TSLA), and it would appear that its ongoing sales have played a part in the delay of the company’s launch of the eagerly anticipated Model X. Tesla has already set the price point of its electric battery-driven car at $81,070 in the United States, but it has now also announced that it will retail for 734,000 yuan ($121,300) in China, once duty and taxes have been taken into consideration.
Wu continued to promote the quality of the Model S during her statements about Tesla’s future, waxing lyrical on the quality of the company’s most successful vehicle and asserting that it offered “great value”. The Tesla executive was born in Beijing, and she took time during her statement to laud her home city’s extensive support for electric and plug-in electric hybrid cars.
However, despite the huge plans that the company clearly has for its Chinese operations, Wu also emphasized that Tesla presently has no plans to shift any form of production to China. She stated that this wasn’t currently under consideration. But despite her statements, Tesla Motors Inc (NASDAQ:TSLA) must surely be eying producing some of its vehicles in China if it is to play such a big part in its future sales strategy. This would seem like common sense under any circumstances, but given the huge reputation that China has built up within manufacturing, ultimately it would seem to be an inevitability.
CEO bullish on China
Meanwhile, the founder of the company, the flamboyantly named Elon Musk, has also been wading in on the subject of China. The billionaire co-founder and chief executive officer of Tesla’s operations has recently claimed that, as predicted by ValueWalk, that for Tesla the Chinese market “could be as big as the U.S. market, maybe bigger”. Musk also referenced the possibility of constructing vehicles in China, but tacitly ruled this possibility out for the time being, but given this brief statement from the CEO, such as eventuality must be being investigated behind the scenes. It would simply seem negligent not to be doing so. Musk said that Tesla’s Chinese sales will probably match their US figures by 2015.
While the value of Tesla shot up astronomically last year, quadrupling in value, motor industry analysts have also praised their Chinese approach. John Lovallo, an equity analyst for Bank of America, stated that though the company was launching its products at a higher price point in China than the United States that it was “well below expectations”, and was in fact extremely competitively priced.
With Tesla Motors Inc (NASDAQ:TSLA) relying on an extremely hardball strategy of undercutting its rivals and attempting to establish a Chinese presence in the growth market that is electric cars before any other major car manufacturer can compete, their growth success story could be set to continue into the future.