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Originally published Thursday, January 23, 2014 at 6:46 PM

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Tesla sees big future selling its electric cars in China

Tesla’s CEO, Elon Musk, says sales of his electric cars in China, which will start at $121,280, “could be as big as the U.S. market.”


Bloomberg News

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Tesla Motors’ Elon Musk said sales of electric Model S cars in China should match U.S. levels as early as next year, with demand from the world’s largest auto market eventually requiring a local plant.

The electric-car maker said Thursday that the Model S will be priced from $121,280 in China when deliveries begin.

Musk, Tesla’s billionaire co-founder and chief executive, said that he will travel to China in late March to inaugurate his company’s entry there.

For Tesla, “it could be as big as the U.S. market, maybe bigger. I don’t want to get overexcited about it,” Musk said. “Even without building there locally, it’s always going to be the second-biggest market after the U.S.”

After a rocky start ramping up Model S assembly in 2012, Palo Alto, Calif.-based Tesla surprised analysts and investors this month when it said fourth-quarter deliveries were 20 percent above its target.

Musk, 42, has pinned his goal of selling hundreds of thousands of electric autos annually to a global strategy in which China, Europe, Japan and other markets bolster its U.S. business.

If all goes well, Model S shipments to China can match U.S. sales by 2015, Musk said.

“It’s not my firm prediction — it’s more like a low-fidelity guess,” he said.

The company named for inventor Nikola Tesla more than quadrupled in value in 2013.

Tesla rose 1.6 percent to $181.50 at the close Thursday in New York, the highest in three months.

The price of Tesla’s flagship Model S in China puts it in the same bracket there as the Audi S5 sedan and BMW’s 5-series GT sedan, according to Autohome, a car-pricing website.

It’s also 50 percent more expensive than in the U.S., where the equivalent model sells for $81,070, according to Tesla.

While higher than the U.S. version, the Model S price for China appears “well below expectations,” John Lovallo, an equity analyst for Bank of America who rates Tesla underperform, said Thursday in a research note.

Since the Model S is imported to China from California, a duty of as much as 25 percent is added to the price tag, Musk said.

The company also must cover shipping costs and taxes. Tesla could have charged more than $160,000 had it followed standard industry practices.

“They’re basically calling us huge idiots for not ripping off customers in China.” Musk said. “I don’t think ripping off customers is a good long-term strategy.”

“It’s a good price,” John Zeng, Shanghai-based managing director of researcher LMC Automotive, said of Tesla’s Model S.

“This should attract premium customers to try this product, especially in big cities.”

At Tesla’s flagship store in a Beijing mall populated by high-end boutiques such as Van Cleef & Arpels and Mulberry, hotelier Kevin Chen says he’s interested in buying the Model S to bump up his green credentials.

“I heard about the car from my friends overseas and we are very interested in getting one,” said Chen.

“Smog in China is getting so bad that we should do whatever we can to help.”



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