Tesla Motors Inc Starts Old Car Trade-in Program In China

Tesla Motors is initiating a trade-in program for Chinese buyers, enabling them to replace their old cars and then buy a Model S. The move is a part of the electric vehicle maker’s strategy to enhance sales of its sedan in the biggest vehicle market.

China an important market for Tesla

Tesla Motors is all set to enter into an agreement with used car traders to buy vehicles from customers in Beijing, Shanghai and Hangzhou, according to an email to Bloomberg. The value of the old car the person sells will be deducted from the Model S price, which starts at 648,000 yuan ($104,000) in China. The Palo Alto-based company started shipping the Model S to China since April, and according to the CEO Elon Musk, the company will be able to produce the Model S in China within three to four years.

Tesla Motors has a total of nine stores and service centers in six Chinese cities and has entered into a deal with network companies such as China Unicom and Soho China to build charging stations in the country. Additionally, Tesla Motors has 700 power points in 70 cities across China, making it the biggest charging network after the charging network in the United States. Recently the EV maker saw a setback when Veronica Wu resigned as head of its China operations after holding the post for less than a year.

Right time to invest

According to a report from FactSet, the year 2015 is going to be a happy year for Tesla Motors, with its stock expected to rebound 30%. The data states that in 2015, shares of Tesla could be worth more than those of Google, Apple and Priceline shares. Gasoline price are declining, which is why investors are showing interest in gasoline-powered cars, creating a challenging situation for the electric car company. However, analysts are confident about Tesla Motors, suggesting that it is a high-end technology story rather than being nothing but an alternative to gasoline-powered vehicles.

Pacific Crest analyst Brad Erickson stated that the stock will have a 48% rally, rising to $316 over 2015. Erickson suggested, “While TSLA is a momentum stock, investors have been baking in that lower oil prices will be certain to reduce demand for electric vehicles, regardless of pricing.”

According to Erickson, the market is not in a specific trend at present, and this has created a much better “entry point” in Tesla Motors.