Tesla Motors Inc (TSLA) Popular In China, But A Few Issues Remain

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Tesla Motors Inc (NASDAQ:TSLA) products are no doubt very popular – the fact is evident from the numbers that the company delivered, which were a total of 6,982 Model S vehicles, helping it to earn revenue of $761 million in the fourth quarter. After becoming one of the most popular vehicles in the United States and Europe, the company has immense opportunity to thrive in China.

Tesla vehicles, stock popular in China

Tesla Motors Inc (NASDAQ:TSLA) delivered its first Model S vehicle in China back on February 25th. According to a report from Want China Times, the demand of the car as well as the stock has since then been on the rise. The report further states that the company has received substantial pre-orders.

CEO Elon Musk is upbeat on demand in China and, in the fourth-quarter letter to shareholders, noted that going by the current trends the supply would be less than the demand in China this year. During the earnings call, he said that the demand will be more than what the company can fulfill in China for the current year.

In the last quarter of fiscal 2013, Tesla posted earnings of 33 cents per share on $761 million in revenue. It sold total of 6,892 Model S units and non GAAP gross margin for the quarter came in at 25.2%. Analysts at Thomson Reuters expected Tesla to earn 21 cents per share on non GAAP revenue of $677.36 million. At present, Tesla has a market capitalization of above $30 billion, nearing to the likes of Ford and General Motors, and is becoming one of the most popular stocks on the China A-market.

A few setbacks


Though the immense success and increasing market cap is working in favor of Tesla, there are some hindrances, as well.

Tesla Motors Inc (NASDAQ:TSLA) has a load of good features that justify the price of the car, but it is not yet known if the customers would be interested in buying it at such high price. Tesla no doubt has some exceptional and high end technology, but the price is probably too high. For instance, the price of Model S costs around 734,000 yuan ($121,300), which though is less than other imported electric vehicles, is still too high for many of the Chinese consumers.

Another setback is the small Supercharger network, and limited infrastructure. Tesla Motors Inc (NASDAQ:TSLA) is surely working to overcome this limitation, but it would take up some time to offer satisfactory services. During the earnings conference call, Musk noted the company is “working pretty hard on that, and we believe we’ve got some good solutions.”


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