Is China the Key to All Those Tesla Model 3 Deposits?

Tesla

Source: Tesla

So far, around 400,000 people have put down refundable deposits for the Tesla Model 3 electric car, according to the company. That’s an impressive amount of interest considering Tesla Motors has yet to show the final version of the car, and won’t start production until late 2017 at the earliest.

As it turns out, many of those reservations may have come from a country that now represents one of the largest markets for electric cars. China is the second-largest source of Tesla Model 3 pre-orders, according to the South China Morning Post.

Model 3 gray field

Source: Tesla

“The potential is huge,” Tesla global vice president Robin Ren said recently, without disclosing the exact number of Chinese reservations. In China, the Model 3 will sell for close to the $35,000 base price of U.S. versions, and Chinese customers must put down a deposit of 8,000 yuan (just under $1,300).

Tesla model 3 gray

Source: Tesla

However, Chinese customers will have to wait much longer than their U.S. counterparts. Model 3 production is slated to start in late 2017, but Tesla will roll it out to different markets gradually. West Coast deliveries will come first, followed by other regions of the U.S. Only when the backlog of U.S. orders is cleared out will Tesla begin delivering cars internationally.

It’s unclear where China will fall on Tesla’s list of priorities for international markets. Tesla did begin delivering Model X crossovers in China before the model was introduced in Europe. Tesla sales in China have been hampered by high import duties and shipping costs, but the company may address that issue by the time the Model 3 launches there. That’s because the company is considering building a Chinese factory.

Tesla

Source: Tesla

President Jon McNeill recently visited China and commented on the possibility of a factory there, according to Seeking Alpha. Tesla CEO Elon Musk previously discussed a Chinese factory, and Tesla executives reportedly scouted locations in the Suzhou region earlier this year.

Tesla currently ships all cars to China from its sole assembly plant in Fremont, California, and the costs involved translate into higher prices for Chinese buyers. China also lacks robust charging infrastructure, despite a recent boom in electric-car sales.

One potential hurdle for the Model 3’s long-term chances is the government’s plan to phase out electric-car subsidies by 2021. Delays in either the launch of the Model 3 or construction of a Chinese factory could prevent the company from taking advantage of those incentives before they disappear.

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