Founded in 2003 and headquartered in California, Tesla Motors (TSLA, Financial) develops and manufactures electronic vehicles. Tesla’s goal is to accelerate the world’s transition to electric mobility with a full range of increasingly affordable electric cars. Tesla vehicles and EVs powered by Tesla are fun to drive and environmentally responsible.
China becoming a potential market
Electronic cars are still not a big hit in China, but there is a steep rise in the demand for luxury vehicles. Keeping this in mind, TSLA is all set to sell around 5,000 cars alone in China this year. China is world’s biggest car market and TSLA poses great opportunities here. This year, China may supersede the U.S. as around 10 million units are expected to be sold.
According to the China Association of Automobile Manufacturers, China surpassed the U.S. to become the world’s largest automobile market in 2009 with a record 13.9 million vehicles sold in the country, compared to 10.43 million cars and light trucks sold in the United States. There is a quickly growing demand for transport in China as more people can afford to buy cars. To support its commitment to encourage electric-vehicle development the government will provide US$15 billion to the industry. Their intention, in addition to creating a world-leading industry that will produce jobs and exports, is to reduce urban pollution and decrease its dependence on oil. As such, government’s goal is to have five million battery-electric and plug-in hybrid electric cars on the road by 2020, while also producing one million such vehicles annually by 2020.
The Chinese government has developed a plan to make China one of the leading producers of electric and hybrid vehicles by 2012. The goal meets two basic needs: to improve the environment and save energy at home, and to transform Chinese automakers into major players in the global automobile industry. Although China already has one of the largest automotive industries in the world, one of its biggest shortcomings is its outdated gasoline engine technology. Transitioning to large-scale electric-vehicle activity could give China a competitive advantage over the West.
Capitalizing on the low barriers to entry in the industry, stakeholders are establishing credibility in the manufacturing of electric-vehicles. However, there has also been a recent push in China to complement manufacturing with defined segments across the value chain including energy storage, energy infrastructure, distribution, and value added services. (Source: Wikipedia)
Opportunities for Tesla
TSLA is initiating building up of a solid base in China. The company is building battery charging stations in Shanghai and Beijing. To exhibit its vehicles, TSLA has opened an approx. 9000 sq. foot store in Beijing. TSLA has entered into a deal with China Unicom (Hong Kong) Ltd., second-largest mobile phone company of China to build up 400 charging stations across China in 120 cities. TSLA CEO Elon Musk has made it distinct that the Chinese market poses great potential for TSLA. As compared to other luxury car manufacturers, TSLA has prices that will appeal to the Chinese market. It may aid TSLA to bolster growth in this part of the globe. By the end of 2014, TSLA plans to open 10 to 12 stores in China. TSLA may come up with manufacturing vehicles in China by the end of 2018. "At some point in the next three or four years we'll be establishing local manufacturing in China," CEO Elon Musk said in Beijing. "China is very important to the future of Tesla."
To end
China is aiming to sell 5 million electric cars by 2020. Automobiles are becoming big status symbol in China and TSLA surely has a very potent market over here. Chinese government is all set to invest a whopping $16 billion for the growth of its electric vehicles. China has an evolving and growing middle class, which works in favor of this company. TSLA has huge prospects to prosper in this market in the near future.
