As Tesla Sizes Up China, These Obstacles Exist

Tesla Model S

The nonstop roll of Tesla Motors (NASDAQ:TSLA) continued this week as CEO Elon Musk took to Twitter as well as CBS to boast about the Model S’s perfect safety rating from the National Highway Traffic Safety Administration (NHTSA). Meanwhile, Bloomberg reports that Tesla landed at least 300 orders for the Model S in Hong Kong, where the company plans to open a showroom this fall. Still, several obstacles may stand in the electric car maker’s way in China.

Plenty of Good News 

There was plenty to celebrate on the positive side of the ledger for Tesla. The company released a statement saying it had “achieved a new combined record of 5.4 stars” in NHTSA safety tests of its flagship Model S sedan. Though no one – including the NHTSA – had ever heard of a score above a 5-star rating, Tesla’s company statement notes the Vehicle Safety Scores would back up the automaker’s claims.

Musk piggybacked on the news by telling CBS’s This Morning that the Model S actually destroyed the crusher that tried to crush the Model S during the test. There never seems to be a dull second for Tesla, and the public posturing of its chief executive appears orchestrated for that very effect. However, with Tesla, there are always the numbers to back up the company’s boastfulness.

tesla

According to a Bloomberg report, the Model S is attracting buyers who love luxury cars like Mercedes Benz (DDAIF.PK) as well as lovers of all things green and exotic. The news outlet quoted Tesla’s Honk Kong sales manger saying the number of orders already taken in China, the world’s largest auto market, have exceeded those taken in Japan, the U.K., or Australia.

The Bad News on the Brand Name

When news of Tesla’s plans to expand to China broke, many observers believed there wouldn’t be a market for a luxury electric car there. That opinion may be proven wrong in the coming months. But it’s unlikely that Tesla — or anyone else — saw a challenge coming on the automaker’s brand name in China. According to Reuters, a local businessman registered trademarks on the Tesla name in 2006, which may bar the EV maker from using it.

In fact, the businessman is operating a website with the address Teslamotors.com.cn while promoting electric cars he is selling in order to tap into the country’s changing ideas about EVs, Reuters reports. While many industry analysts saw the potential for a copycat brand emerging in China, none predicted there would be one already operating in the country — and one legally using Tesla’s name to do so.

In all likelihood, Tesla will have to buy the rights to the trademark from this businessman if the EV maker cannot prove it is legally entitled to it already. Meanwhile, a difference in culture is prompting Tesla to rethink an area of the car to which the automaker had not devoted so much attention: the back seat.

Send for My Driver

Musk has already gone on the record saying Tesla is planning to up the luxury quotient for the back seats of the Model S to accommodate Chinese consumers, who often have drivers chauffeur them in a classic symbol of luxury living, the Bloomberg report noted. Musk acknowledged the company had the driver in mind first when designing the Tesla flagship sedan.

“Obviously if people are being driven around, then we need to make sure the back seat is optimized,” Musk told analysts in early August during a conference call.

Tesla has shown flexibility in right-hand drive models, and it appears the automaker will adapt to the wants and needs of Chinese consumers as well. In a country where a Nissan (NSANY.PK) Leaf sells for nearly $58,000, according to Bloomberg, the sky would appear to be the limit for Tesla.

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