Report: Tesla to Test Its Luck in China

Is China ready for Tesla (NASDAQ:TSLA)? According to a report by the Global Times, Tesla is planning to open a sales outlet in Beijing, possibly before the end of this year, to test its viability in China as government policy shifts toward helping the electric car industry. Though company executives are aware of the risks involved, Elon Musk et al are apparently ready to try their concept out on the world’s largest auto market.

The Chinese media is reporting Tesla will debut its cars in a September auto show in Chengdu prior to opening a shop in Beijing. Tesla is expected to deliver the same type of experience offered in U.S. outlets. With the Chinese government promoting electric vehicles with subsidies for consumers, the timing of the move may be right, though there are questions the market will support it, and whether there will be charging stations to make the move feasible.

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One industry executive told the Global Times the move was premature. “It’s not yet time to make a strong push for the electric vehicle sector,” said Qiao Shungpu, an expert on the Chinese car market. Electric vehicle sales are not booming in China as is, but others are wondering if a substantial number of Chinese consumers exist for an electric car that costs around $70,000 — before taxes and other markups a move to China would entail.

The government would have to approve the Tesla for Chinese consumers, making legal fees and other tariffs part of any package reaching the consumer. “Who would want to buy an electric car at a price that similar to better known gas-powered cars?” wondered Jia Xinguang, who is an auto industry analyst based in Beijing. Other luxury brands from Mercedes or BMW would likely be more attractive to high-end car buyers in China.

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Tesla definitely wants to tap into a broader market worldwide by coming out with a car that costs under $40,000. Its more compact sedan would achieve that goal, though the first will not appear for several more years. On some levels, the world isn’t ready for more Teslas, as there is no place to charge their batteries.

But to answer the question of Jia Xinguang, about who would buy an electric car over a “better known” luxury car powered by gas? Someone who cares about the environment would. Whether many people in China feel that way — and can afford to — remains to be seen.

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