Tesla Motors Inc Unsold Model S Inventory Piling Up In China

Tesla stockBlomst / Pixabay

Tesla Motors is facing dismal sales in China, with nearly half its inventory of Model S sedans remaining unsold, says a report from IB Times, which cites Chinese media reports. Even after a year of its entry into the world’s biggest automobile market, the EV carmaker is finding it hard to create substantial demand for its Model S electric car.

Dismal performance in China

Nearly half of the 4,800 Model S sedans shipped remained unsold last year, as claimed by a Chinese media report that cited some of the 200 Tesla employees that are expected to  be laid off as part of a restructuring program undertaken by the company in the region.

According to CarNewsChina.com, about 2,300 Model S electric cars that Tesla failed to deliver to Chinese roads are parked at the Port of Tianjin and a dealership lot in Shanghai. The rest of them are kept in Beijing at a facility owned by the city’s biggest Mercedes-Benz dealer.

Tesla’s sales performance has been disappointing in China, as only an average of 208 cars were sold per month last year. This number reportedly plummeted to 120 cars in January.

Citing an anonymous Tesla source, a report from online news service Guancha.cn earlier this month claimed the reason for the pent-up inventory has been cancellations of pre-ordered Model S cars, which start at $103,000. The policy demanded two deposits: the first of $2,400 and another of $40,000, which was more difficult to collect, as claimed by the source.

Tesla makes every possible efforts to push sales

Tesla has not confirmed the reports, however, CEO Elon Musk acknowledged previously that sales of the Model S have not met the expectations of the company. Further, in the fourth quarter conference call with analysts, the Tesla CEO asserted that the firm has not responded well to the Chinese market and blamed the sales team for misguiding potential customers regarding the charging of electric cars in the country.

Musk claimed that low initial demand has more to do with persuading consumers that charging electric cars is not an issue. Therefore, in an attempt to expand its sales, Tesla has been building quick charging stations called superchargers where owners can charge 80% of their battery in about a third of an hour.

However, due to the less spacious back seats and low-cost substitutes available, Tesla could still have to go a long way to find a considerable place in the lucrative Chinese market.

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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 [email protected]

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