Text: | Print|

Tesla aims to be competitive in China’s electric vehicle market

2014-02-10 09:36 Xinhua Web Editor: qindexing
1

With its racing body, reasonable pricing and ecological concept, Tesla's latest pure electric sports car has caught the eye of motor enthusiasts, industry insiders and environmentalists in China.

Amid high sales expectations and cautious sizing up by Chinese automakers, there is also hope that the American upstart can bring a breath of fresh air to China's stagnant new energy vehicle sector.

Tesla, a US electric carmaker established in 2003, has generated buzz in the United States by building a coas

t-to-coast network of charging stations for customers to charge their cars quickly during long-distance journeys.

It sold 18,650 units of the Model S in the US market last year, up a whopping 611.8 percent year on year, ranking third in electric car sales, following auto models from giants General Motors and Nissan.

The company made its debut in China this month with the Model S at a lower-than-expected price of 734,000 yuan (US$121,300), almost the same as in its home country, excluding taxes and transport costs.

The move was expected to drive a competitive edge for Tesla to gain a foothold in the world's largest auto market and put pressure on its rivals.

Zhang Junyi, an auto analyst with Roland Berger Strategy Consultants, said that "Tesla could be a catfish put into the sardine pool of China," stimulating domestic manufacturers to carry out development of their own high-end electric vehicle brands.

However, Tesla's success on the other side of the Pacific is far removed from the complex competition of the Chinese market, and its high expectations in both sales and influence have yet to be proved in China.

Low electric vehicle sales

In 2013, vehicle sales in China totaled 21.98 million units, marking the country's fifth straight year as the world's largest auto market.

Nevertheless, sales of new energy vehicles stood at just 17,642 units, with sales of pure electric cars even weaker, accounting for less than 0.1 percent of the country's total car sales.

While the lackluster sales in China indicate a difficult market for Tesla, the figure also suggests the untapped potential of the emerging market and reveals there are few, if any, strong competitors that pose a threat to Tesla.

"Actually, no automaker in China considers electric sedans for individual customers a major development strategy, not to mention as luxury cars for high-end buyers," said Zhong Shi, an auto industry analyst.

Jia Xinguang, an industry insider, echoed Zhong's words, pointing out that market demand for electric sedans has remained weak, as few electric auto models in China can satisfy consumers and compete with conventional cars.

Chinese electric car buyers still face difficulties in finding charging stations when their batteries run low.

More importantly, according to Jia, price-sensitive Chinese car buyers are more inclined to choose gasoline vehicles that provide a more comfortable driving experience at the same or lower price.

Chinese companies are therefore reluctant to spend big bucks exploiting the electric sedan market, as even the most popular domestic brands from major producers like BYD Auto, Chery and JAC Motors saw their electric car sales linger around the thousand-unit level.

Even if homegrown manufacturers change their mind and try to catch up with their peers overseas, their technological reserves and financing mechanisms in China can't support production and promotion of cars like Tesla's, Zhong said.

"However, the electrification of public transportation services has proved to be a growth point boosted by government policies," Jia said.

BYD Auto, a Chinese automobile manufacturer based in southeast China's Shenzhen, has seen strong sales of electric buses and taxis, which are easily found in the city and in Shaanxi and Hunan provinces.

In recent years, the proportion of pure electric coaches in China's bus market has grown quickly. The figure has climbed from 2 percent in 2010 to 9.9 percent in 2012, and is expected to approach 20 percent for 2013.

Targeting high-end buyers

As Tesla targets high-end buyers, it is unlikely to be confronted with the harsh market facing Chinese automakers, which focus on inexpensive electric vehicles, since neither the price nor the inconvenience of charging are likely to dissuade wealthier buyers with their own villas and underground garages.

"Headwinds will only hit when Tesla starts to expand its business to China's low-end electric sedan market," Jia said. However, there are few signs of this happening in the near future.

China's new energy vehicle sector is just unfolding, and it still requires further policy encouragement, infrastructure and consumer recognition.

Zhang stressed that the country's electric sedan producers are not yet mature, as they lack technology and find difficulties in application.

In response, the central government has rolled out an array of measures, ranging from subsidies to facility construction to boost the sector.

In 2010, China began a pilot program in five cities — Shanghai, Shenzhen, Hangzhou, Hefei and Changchun — to encourage individuals to buy electric sedans with subsidies of up to 60,000 yuan.

The program was upgraded last year with a national promotion project in 28 Chinese cities and city clusters where government subsidies will be provided for users and manufacturers from 2013 to 2015.

The government expects both sales and production of pure electric and hybrid vehicles to reach 500,000 units by the end of 2015, but it won't be an easy task.

For Tesla, however, official subsidies are just the icing on the cake. With possible plans to build factories and charging stations in China, the US electric car manufacturer hopes the Chinese market will account for up to a 35 percent increase in global sales this year.

In 2013, some 22,500 units of Model S were sold in the global market, according to data from Tesla.

Comments (0)
Most popular in 24h
  Archived Content
Media partners:

Copyright ©1999-2018 Chinanews.com. All rights reserved.
Reproduction in whole or in part without permission is prohibited.