February 7, 2013

Tesla To Enter China’s Cloudy Electric Vehicle Market

Slated For 25 More Dealerships in 2013, Including First In China

Tesla Motors will encounter a tough China market

Silicon Valley-based Tesla Motors, manufacturers of electric cars, recently announced plans to open 25 more dealerships in 2013 — almost double the 13 it opened last year — with the first new location slated to open this spring in China. According to the company, the remaining dealerships will be roughly divided between the United States and other international markets.

Tesla’s plans to expand into China may encounter a mixed reception, however, as electric vehicles (EVs) and even hybrid vehicles have consistently underperformed in the Chinese market. As the China Post explained, “Hybrids have been far less popular with consumers in such major markets as Europe and China. The outlook for pure electric vehicles is even more cloudy.” Yet, growing concerns about China’s endemic traffic congestion and worsening air quality have led Ford executive chairman Bill Ford to urge Chinese drivers to embrace electric cars. As Ford recently advised, China should facilitate the adoption of electric cars and embrace new technologies that help motorists find parking spots and avoid traffic:

Unless we change something, we’re going to run into a huge problem of moving people in the major cities around the world, particularly in China. To encourage consumers to adopt electric cars, China needs more charging stations, a power grid that can provide sufficient energy and generation plants that run on cleaner fuel. The technology to deliver electric vehicles is here today. If those issues are addressed, then I think the electrification of the Chinese auto fleet can and will happen and that will have a measurable impact on air quality.

Traffic and air quality aside, it may take some time for Chinese drivers to go electric, especially when many are not willing to pay a premium. That said, domestic Chinese manufacturers, as well as the government, may be leaning toward electric models as China’s largest auto parts maker recently won government approval to buy A123 Systems, an American manufacturer of electric car batteries.

For Asia auto analyst Michael Dunne, “Demand for the short-term, at least, looks to be bigger in China than the United States. That looks like production for A123 may very well shift over to China.” Especially when China’s government plans to offer attractive incentives to people who opt for electric vehicles, giving buyers a check worth upwards of US$9,500. With this in mind, we’ll have to see whether entrenched consumer behavior or new incentives to go electric hold sway over Tesla’s success in China.

Auto / Business & Finance / Investment / Lifestyle / Market Trends
Tag: auto, auto market, china, china luxury... , More
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