Tesla Motors Inc.
) is planning something big for the world's biggest market -
China. This looks the right time for the electric carmaker to
enter the Chinese market where the government is trying to reduce
the sale of vehicles that emit greenhouses gases and the luxury
vehicles become increasing popular among the Chinese buyers. The
company CEO Elon Musk described the move as a "wild card" in the
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Tesla plans to open its first showroom in central Beijing at the
exclusive Parkview Green mall later this year. It would be an
8,000-square-foot showroom, roughly three times the size of its
However, TSLA would face challenges strengthening its base in the
country, mainly due to the lack of charging infrastructure.
Moreover, its flagship car Model S would be subject to import and
luxury taxes in the country, which would push up its already
Many global automakers have shown interest in capturing the
potential luxury vehicles market in China, which is dominated by
European brands. Last month,
General Motors Company
) broke ground for a $1.3 billion plant in China that will
manufacture its popular Cadillac luxury model. GM aims to produce
160,000 vehicles annually from the plant.
In February, General Motors began producing Cadillac XTS sedan at
a plant in Shanghai. GM plans to expand Cadillac's dealer network
to 200 by the end of the year from 69 last year despite sluggish
sales, as it is optimistic about the long-term growth in the
Ford Motor Co.
) also plans to introduce its Lincoln luxury lineup in China in
the second half of 2014.
After months of sluggish growth owing to weak economic conditions
and restrictions imposed by the government on new vehicles, total
vehicle sales in China reflected a steady growth of 11.2% in Jun
compared with 9.8% in May, according to the China Association of
Automobile Manufacturers (CAAM).
The steady growth in sales was mainly attributable to lower
prices, which partially offset the effect of shortage of credit,
weak economy and government restrictions on vehicle registration
due to increasing traffic congestion and pollution in Chinese
Shares of TSLA more than tripled this year. The stock debuted in
the NASDAQ-100 Index and the NASDAQ-100 Equal Weighted Index on
Jul 15, replacing technology giant
Tesla Motors posted its first-ever quarterly profit of $15.4
million, or 12 cents per share, on an adjusted basis, in the
first quarter of 2013. This indicated a whopping positive
earnings surprise of 271.4% given the Zacks Consensus Estimate of
a loss of 7 cents for the quarter.
Revenues jumped manifold to $561.8 million from $30.2 million in
the first quarter of 2012, thanks to the impressive 5,000 units
of Model S electric car sales during the quarter. For full year
2013, the company expects to deliver 21,000 Model S cars
globally, up 5% from its prior guidance of 20,000 units.
In May, TSLA also paid off the remaining $465 million U.S.
Department of Energy (DOE) loan much earlier than expected. The
electric carmaker received the loan in Jan 2010 and agreed on a
10-year repayment program. However, the company repaid the full
outstanding amount of the loan in the second installment itself.
We expect TSLA to beat estimates when it reports 2013-second
quarter results before the opening bell on Aug 7 due to the
combination of the stock's Zacks Rank #1 (Strong Buy) and 27.8%
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