Tesla Motors Inc (TSLA): Why Is It Failing In China?

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Tesla Motors Inc (TSLA): Why Is It Failing In China?
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Tesla Motors is facing hurdles in making inroads for its Model S in China, even after building a lot of excitement around the car in the country. Tesla Motors Inc (NASDAQ:TSLA) CEO Elon Musk successfully achieved his goals in the space, but China seems like a tough nut to crack. Just last month, the CEO was in China admitting that sales were below expectations.

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Why Tesla is struggling in China?

“China is the only place on earth that we have excess inventory,” Musk said, blaming “speculators” for ordering cars amid the early media hype and then not picking up their cars. According to analysts, consumers are doubtful to invest in electric cars due to safety and reliability issues and charging facility problems.

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Beijing is cautious about mounting pollution in the country, and therefore, is in favor of using “new energy” by encouraging the domestic car industry. State-backed power companies are setting up charging stations around the country, but even Neo Wang, founder of mainland charging network builder ChargerLink, acknowledges the problem, says a report from SCMP. Wang bought a Tesla Motors Inc (NASDAQ:TSLA) Model S for himself, but while driving from Beijing to Shenzhen, he got annoyed at stopping every 350km and charging the car. Charging after specific intervals is the biggest concern of people around China, and according to Wang, electric cars cannot capture the market with insufficient charging services, says the report.

Professor Gong Yan of the China Europe International Business School said that Musk and his team have a minimal understanding of the China market, says the report. Yan added, “The fanatical reaction at the time caused a misjudgment of the China market by his team.”

What is Tesla doing?

The current situation, as suggested by mainland media reports, is that there are over 2,000 unsold vehicles, and the company is scrapping jobs in the country. To boost sales there, the EV manufacturer is offering a free charger and free access to its mainland network of more than 50 “supercharging” facilities, similar to petrol stations, but it takes around an hour to charge the car.

Against such a backdrop, Tesla Motors Inc (NASDAQ:TSLA) will be keen in seeking approval and the interest of around 2,000 watchers in the Chinese market during the upcoming mainland premiere auto show in Shanghai.

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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@wordpress-785388-2679526.cloudwaysapps.com
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