Tesla Motors Inc (TSLA) Tweaks Strategy To Up Sales In China

Tesla Motors Inc (TSLA) Tweaks Strategy To Up Sales In China
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To boost sales in China, Tesla has come with a new strategy to change the perception of buyers in the region

Tesla Motors CEO Elon Musk has revised its strategy of selling cars in China in a bid to revive the company’s performance from the gloomy fourth quarter and achieve its ambitious new sales target for 2015. For the current year, Tesla has increased its forecast delivery by 10% to 55,000, which is 74% higher than last year’s total.

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Making efforts to change perception of Chinese buyers

In China, consumers had shown a laid-back attitude when it comes to switching to electric vehicles due to perception that home charging is not a good idea, and there are very few charging stations across the city, according to the Tesla CEO. This, according to Musk, has taken a toll on their sales in the country.

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“In the long term, we do want to succeed in China and make sure we are doing a good job,” he said. “The biggest issue that we are fighting to address is the perception that it’s difficult to charge in China.”

To up sales in China, Tesla plans to install a charger at the buyer’s home before the delivery of the vehicle. A similar strategy is already followed by competitors in China. Additionally, new features will be added such as a second-row center console for owners who are driven by a chauffeur.

Tesla blames weather, holidays for fewer deliveries

Analysts expected the EV manufacturer to post its second best quarter with earnings of 32 cents per share, not including items. However, the company missed estimates and posted a loss of 13 cents per share. Revenue also came in 10% lower than expected. Tesla shipped around 1,000 fewer Model S cars compared to estimates.

According to the Palo Alto-based company, cars were in its inventory by the end of 2014, but they could not be shipped to customers due to a series of holidays and unfavorable weather. The order backlog was in line with the first quarter total production of the cars.

Musk said the scarcity of demand in China was not the reason behind their fourth quarter below-expectation performance and that it will not affect vehicle sales this year. Musk stressed that Tesla will achieve the target of 55,000 vehicles even if it does not sell cars in China.

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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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