There isn’t much an automaker can do with neither a brand name nor a price for its flagship vehicle. Such was the predicament of Tesla (NASDAQ:TSLA) in China, courtesy of a trademark dispute and the wait for a final reckoning of import fees by goverment officials. The electric vehicle maker checked both items off its to-do list recently ahead of unveiling its ambitious goals in the world’s largest auto market. Now Tesla can begin selling its cars with a competitive price in what it expects to be a major growth market.
Though Tesla opened its first showroom in Beijing in November, the automaker could not use the name “Te Si La” on any of its branded materials due to a trademark dispute with a local businessman. Veronica Wu, who is vice president of the electric automaker in China, told Reuters that Tesla “went to court and…won” the right to use its proper name in a market expected to provide one-third of the company’s sales growth in 2014.
T0 give itself a proper shot at this amibitious goal, Tesla needed to put to bed all trademark issues and set a price for the Model S so it can properly launch as many as a dozen more showrooms. The automaker revealed the Model S price in a blog post on January 22. Despite predictions the base (60 kWh) Model S would bear an MSRP over $140,000, Tesla surprised the industry by announcing the premium 85 kWh Model S would in fact be priced starting around $121,000 (734,000 yuan). It’s safe to say the automaker is being genuine when it says its “pricing structure is something of a risk.”
According to the blog post, Tesla’s goal was to deliver the car to the Chinese consumer at the same price it markets the Model S to customers in the U.S. Included is a breakdown of the charges, Minus the $17,700 for the value-added tax, $19,000 for customs and duties, and $3,600 for shipping charges, the Model S with 85 kWh battery comes in at $81,070, which is the base price Tesla quotes on its website before assuming the $7,500 tax credit in the U.S.
Tesla acknowledged the risk to its brand by pricing its vehicles lower than it could in China, saying some luxury consumers could “mistakenly think it must somehow mean the Model S has less value than its competitors.” After rattling off the impressive accolades of the breakout electric car, the post declares Tesla is holding the line on price to offer fairness to Chinese consumers.
If the automaker expects China to power its growth in 2014, it will need a boost as it celebrates clearing the hurdles for a proper China launch. Tesla is staying consistent in its goal of wowing customers with its superior vehicles in order to get their word-of-mouth endorsement. Veronica Wu of Tesla China summed it up to Reuters this way: “Happy customers are the best advocate of your product, right?”