China May Prove to Be a Tough Nut to Crack for Tesla Motors (TSLA)

As Tesla (TSLA) gets ready for its Model S car to be delivered to the Chinese market in the first quarter of the year, an article published Monday on China Daily notes that Mainland is proving a hard nut to crack for the U.S. upstart.

As part of its marketing strategy, Tesla will sell its battery-powered Model S sedan in China from 734,000 yuan (US$120,400), fifty percent the price of an equivalent imported gasoline sedan. But as customers wise up to an already saturated market with some 380 car brands, the price of the Model S, notes the article, ” seems way too high to intrigue China’s price-savvy buyers.”

The article goes on to say that the price for the imported Model S in China is nearly 3X the price of China’s own electric sedan, which “will certainly put a damper on Tesla’s sales.”

In 2013, 22 million new cars rolled onto Chinese roads. According to the paper, “Tesla is out of step with China’s automobile boom, despite the expected explosion in new energy cars, top-down government aid, stronger environmental awareness and a threatened energy crisis.”

Jia Xinguang, a seasoned auto analysts, said that Chinese buyers were more willing to buy gasoline cars that “provide a better driving experience at the same or lower price.”

It’s worth noting that Tesla has received several hundred reservations since it started taking orders in August, Veronica Wu, Tesla China’s VP, told Bloomberg in late January.

“We have very high expectations for the China market,” she said. “To a large extent, China will be a growth engine for Tesla in the future.”

TSLA is currently trading up $7.81, or 3.73 percent, at $217.41. The ticker more than quadrupled last year.

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