Tesla Motors Inc Working On China Revival After Initial Setbacks

Tesla Motors Inc Working On China Revival After Initial Setbacks
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Tesla’s China division has failed to perform in line with expectations. However, now it looks like that the U.S. firm is recovering after the initial setbacks in the region.

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Signs of improvement

Previously, Tesla CEO Elon Musk said that China will account for up to 35% of the company’s global sales in 2014. Last year, amid the fan frenzy, Tesla launched its Model S electric car in China. However, the prediction failed, and sales were so meager that the company’s China division had no choice but to lay off executives within months of Musk’s visit in April.

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Vehicle licensing data gathered by the China Automobile Dealers Association suggested that Tesla China sold only 2,499 electric cars last year, which is just half the number of Model S cars imported into the country, says a report from MarketWatch. Sales in China contributed only a small fraction of the 31,700 vehicles Tesla sold around the world last year, according to the company’s latest financial reports.

However, in the first quarter, sales revived with 1,055 new Tesla vehicles being licensed, according to marketing consultancy JL Warren Capital. Additionally, the company is trying to implement new strategies for enhancing business under Tom Xiaotong, Tesla’s current executive in charge of China operations. Zhu also supervised Tesla’s charging network development unit in China and held the topmost position in the country after Veronica Wu Bixuan, who resigned within nine months of taking charge.

Can Tesla overcome the challenges?

In China, Tesla is facing formidable challenges. According to Zhu, at present, the company is looking for ways to overcome the battery charging issues there. Over the past few years, the state-run power Distributors State Grid and China Southern Grid have set up more than 20,000 battery charging stations across the country which are tailor-made fo electric vehicles made in China, which is a huge setback for the U.S. firm, says the report. Though many believe Tesla won’t be able to resolve the issue, the U.S. firm is already in action and working to develop its own network of charging stations.

Tesla is looking to stage a turnaround this year under the supervision of Zhu. The company is looking to curb the unique market access hurdles from battery charging stations to government relations and acquire more customers, thus proving it can adapt. Additionally, the company will be hoping that at least some of Musk’s predictions about China sales come true.

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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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