Tesla Motors Inc To Manufacture Cars In China In 3-4 Years

Tesla stockBlomst / Pixabay

Tesla Motors Inc (NASDAQ:TSLA) is planning to manufacture cars in China in the coming three to four years, according to the company’s CEO Elon Musk, says a report from Bloomberg. The electronic vehicle maker is gearing up to deliver the Model S in the Asian country. Model S deliveries will start in China after Musk inaugurates it during an event to be held tomorrow.

Local production could lower cost by 25%

To materialize its plans of boosting sales of electronic cars in China, Tesla Motors Inc (NASDAQ:TSLA) is expanding its network of battery charging stations in the country including superchargers in Beijing and Shanghai, as per the statement of Musk during Geekpark conference in the China’s capital on Monday.

“At some point in the next three or four years we’ll be establishing local manufacturing in China,” Musk said. He added that China is vital for the future of Tesla and the company is thinking to make big investments to update the charging infrastructure.

To everyone’s knowledge, China is the biggest automobile market in the world, and if Tesla Motors Inc (NASDAQ:TSLA) achieves the goal of local production in the country, the cars would be delivered to the customers at lower prices by cutting the 25% import tariff levied by the system. In China, the Model S manufacturer is expecting to sell as many vehicles as in the United States by next year, and Musk will also make efforts to induce people to buy electric cars, which the Chinese government has struggled to do so far.

Car makers closely watching Tesla

Finbarr O’Neill, president of J.D. Power & Associates said that Tesla Motors Inc (NASDAQ:TSLA) may sell a decent number of units in the market. He added that although there is much to talk about with Tesla their sales numbers are not very high. O’Neill mentioned that Musk has given a stellar performance in various segments, but there is a limit to every market.

Tesla Motors Inc (NASDAQ:TSLA) shares rallied to add around 32% this year after surging four fold in 2013.  In China, the electronic car maker has kicked in the pre-orders since August last year along with opening an 800-square meter (8,600 square feet) store in a Beijing shopping mall to showcase its vehicles.

Other electronic car makers are closely tracking Tesla Motors Inc (NASDAQ:TSLA)’s entry and performance in China. Owing to a lack of appropriate infrastructure and high costs, China has yet to reach its target of 5 million alternative energy-powered vehicles by 2020.

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About the Author

Aman Jain
Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@valuewalk.com

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