Tesla Sets Sights on Fledgling China EV Market

Tesla Motors has been on a strong run in the days leading up to its August 7 earnings report. Sales are up and the Model S is the 2013 Motor Trends Car of the Year. The Silicon Valley startup is exporting more cars to Europe while at home, automakers such as GM have taken notice.

Now, the luxury electric vehicle designer and manufacturer is venturing into China. A showroom will open in Beijing, prescient timing as automobile sales continue to surge and the air quality in the country’s largest cities only worsen. But can Tesla succeed in a country more keen on manufacturing electric vehicles (EVs) than actually buying them?

According to the San Jose Mercury News, Telsa is ready to market the Model S in a country quick to adopt brands that bring prestige, from the iPhone to Armani. The company hired a former Bentley China executive as its general manager for China, and its CEO, Elon Musk, predicts 5,000 cars a year being sold in Asia—perhaps even more depending now how well received the Model S and future models are received in China.

Electric cars, however, are a tiny part of the market in China, so Tesla’s move certainly has its risks. The Wall Street Journal has noted that, despite EV subsidies, only 11,375 EVs were purchased last year in a country where total automobile sales figures hit 19.3 million. Analysts point to the lack of an EV infrastructure in China and the gap between government goals and what consumers actually want to drive on the roads. Combine the geographic size of China’s sprawling cities with the omnipresent range anxiety, and EV manufacturers have a massive consumer education agenda ahead of them. While the world’s leading automakers have pushed hybrids in China, sales of such cars have been sluggish, too.

Nevertheless, rising oil prices and increased congestion throughout China contribute to China’s promise as a leading EV manufacturer and purchaser. As business writer Pedro Delgado points out, the Chinese government has realized its domestic automakers will never catch up to other global companies who lead in internal combustion engine technology. Hence the government’s support of companies such as Kandi Technologies, which manufactures electric cars lacking Tesla’s flash but are far more cost-effective for the average Chinese consumer. BYD, a Chinese car manufacturer, is also bullish on electric cars—the WSJ reports that it plans to roll out these EVs in markets across the world.

Meanwhile, Telsa plans to open a dealership in a tony LEED certified shopping center in central Beijing later this year. With its brand appeal, outstanding design and growing concern over China’s air quality and environment, Tesla should be able to sell several thousand vehicles throughout the country easily. And Beijing’s horrid air pollution could certainly benefit from fewer carbon emissions.

Based in Fresno, California, Leon Kaye is the editor of GreenGoPost.com and frequently writes about business sustainability strategy. Leon also contributes to Guardian Sustainable Business; his work has also appeared on Sustainable Brands, Inhabitat and Earth911. You can follow Leon and ask him questions on Twitter or Instagram (greengopost).

[Image credit: Tesla]