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Tesla to open car outlet in China

2013-06-07 10:51 Global Times     Web Editor: qindexing comment

US electric car manufacturer Tesla Motors plans to open its first sales outlet in China, a Chinese newspaper reported Thursday, but industry analysts cast a skeptical eye on the move, which they told the Global Times Thursday would involve considerable risks and uncertainties.

Tesla Motors is set to embark on its China venture with its first China sales outlet in Beijing, the China Youth Daily reported Thursday, without revealing the exact time frame.

The firm could not be reached for comment by press time.

Founded in 2003 by Silicon Valley entrepreneurs including Elon Musk, who also co-­founded PayPal, Tesla Motors has proven especially popular among celebrities in its home market.

Posting a quarterly profit for the first time in early May, the Palo Alto, California-based electric car maker announced in late May it has managed to pay off nearly half of the $1 billion in low-interest federal loans it got from the US Department of Energy in 2010, a further indication of its vitality.

The NASDAQ-listed electric car maker's potential China market foray comes at a time when the Chinese government has been actively promoting the use of energy-saving automobiles, but is nevertheless quite a risky move in the eyes of industry watchers.

"It's not yet time to make a strong push for the electric vehicle sector," Qiao Shengpu, general manager of the automotive division at Beijing Topduty Management Co, told the Global Times Thursday, noting that China's market for electric vehicles is far from taking off despite the government's favorable policies and subsidies.

The government intends to release a new subsidy policy to popularize the purchase of hybrid and electric vehicles, replacing a previous policy that expired at the end of 2012, the official China Securities Journal reported on May 23, citing an unnamed official with the Ministry of Industry and Information Technology, the country's industry watchdog.

In addition to concerns over the availability of charging facilities in China, the pricing of Tesla models is expected to be an impediment to its popularity in the market, Jia Xinguang, a Beijing-based independent auto analyst, told the Global Times Thursday.

Tesla has vowed to reach the mass market by building a $40,000 electric car by 2016. Its current Model S sedan starts at $62,400, according to the company's website.

If Tesla enters the Chinese market, tariffs will drive the price even higher, Jia said, asking, "Who would want to buy an electric car at a price that's similar to better-known gas-powered cars?"

The electric vehicle industry's future is still cloudy, Jia noted. On the one hand, Warren Buffett-backed Chinese automaker BYD Co recently advanced its electric vehicle business by setting up shop in the US. On the other, US green car maker Fisker Automotive, seen by many as a typical green car startup, is already on the verge of bankruptcy.

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