Tesla Motors, Inc.
) announced on a Chinese website that it has started the
reservation of Model S in China. Earlier this month, the company
had revealed its plans to open a showroom in Beijing.
Tesla's closest international competitor in China - the
world's largest automobile market, is
General Motors Company
) plug-in hybrid Chevrolet Volt. Electronic cars are not very
popular in China.
However, the previous electric cars targeted the masses, while
Tesla's car targets the wealthy consumers in China, who seek the
latest products and technology available in the market. Moreover,
the car is expected to be popular among the environmentally
Model S is already popular in Hong Kong with more than 300
reservations, despite the fact that Tesla has not even fixed the
price of the car in the region. In fact, the figure surpasses the
demand for Model S in the company's established markets like
U.S., Australia and Japan.
The popularity of Model S in Hong Kong increases optimism
about the acceptance of the car in mainland China as well.
However, shortage of charging stations in the country could
discourage people from buying the car.
Moreover, the high tariffs on imported cars in China could
raise the price significantly. Model S is currently manufactured
in California and Netherlands.
Tesla can overcome this problem by opening a manufacturing
facility in the country. The automaker has plans of opening a
plant in Asia. Tesla is also planning to make the rear seats of
Model S more comfortable as the wealthy Chinese section prefers
Tesla expects Model S sales to cross 40,000 by 2014, assuming
the demand in Asia and Europe meet expectations. The car was
launched in the U.S. in 2013 and is also available in Europe.
Tesla currently carries a Zacks Rank #3 (Hold). Other major
automobile stocks worth considering are
Nissan Motor Co. Ltd.
). Both these stocks carry a Zacks Rank #1 (Strong Buy).
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