If you’ve been following the exploits of Tesla Motors (NASDAQ:TSLA) in China, then this is the bit of news that you’ve been waiting patiently for — or maybe impatiently. Regardless, it’s here: Tesla will be selling its Model S sedans in China for 734,000 yuan, or about $121,280 dollars, for the 85 kWh-equipped Model S sedan.
That sounds like a lot of money, mainly because it is a lot of money by just about anyone’s standards. But when compared with the high price premiums that other luxury cars in China command, it’s about on par with Tesla’s primary competition. An Audi S5 sedan and BMW’s 5-series GT sedan, according to the car-pricing Web site Autohome, run about the same amount. To illustrate the gaping chasm between prices, a base 5 Series GT costs about half of that here in the States.
Tesla points out that the equivalent model of Model S sells for $81,070 in the U.S. “The price of a Model S in China is the same as the price of a Model S in the U.S., adding only unavoidable taxes, customs duties and transportation costs,” Tesla said in a statement.
“This pricing structure is something of a risk for Tesla, but we want to do the right thing for Chinese consumers,” the company continued. “If we were to follow standard industry practice, we could get away with charging twice as much for the Model S in China as we do in the US. But we’re doing things differently, even if it means that some people might look at the price and mistakenly think it must somehow mean the Model S has less value than its competitors.”
Tesla’s decision to lowball its pricing scheme in China is likely a big boon for the Chinese government, which has had its fair share of issues in trying to put 5 million alternative energy-powered vehicles on Chinese roads by 2020, because of a lack of charging stations, high costs, and concerns about safety and range. Bloomberg noted that Tesla’s arrival in China is being closely scrutinized by other manufacturers, who have also been trying to persuade local consumers that electric vehicles are worth the hassle.
New electric car subsidies in China should also help spur the demand for Tesla in the world’s largest automotive market; the Chinese central government is reportedly pledging as much as 60,000 yuan ($9,900) toward the purchase of an all-electric passenger vehicle. “It’s a good price,” John Zeng, a Shanghai-based managing director of researcher LMC Automotive, told Bloomberg. “This should attract premium customers to try this product, especially in big cities.”