China Likely To Yet Become Tesla’s Largest Market

Tesla Model X

MAY 22 2017 BY EVANNEX 8

Tesla

Tesla Model S in China (Image: Gas2)

NEXT FRONTIER: CHINA COULD BE MASSIVE FOR TESLA

The Wall Street Journal reports that, “Elon Musk’s futuristic ventures and risk-taking often draw mixed receptions in the U.S. In China, tech-industry leaders and investors hail him as a genius and visionary worth cheering on.”

That could be a a good thing as China may soon grow to become a massive part of Tesla’s future growth. Last month, Bloomberg reported, “Tesla Inc.’s revenue from China last year tripled to more than $1 billion, indicating better traction in the market Chief Executive Officer Elon Musk has predicted could eventually become the company’s biggest. China accounted for more than 15 percent of Tesla’s more than $7 billion of total revenue last year… [while] sales from the U.S. more than doubled to $4.2 billion.”

*This article comes to us courtesy of Evannex (which also makes aftermarket Tesla accessories). Authored by Matt Pressman.

Why is this market important for Tesla? Business Insider reports,

“Like many US companies looking to grow, Tesla has its eyes on China. After some early issues with slow deliveries and lower-than-desired sales, the electric carmaker topped $1 billion in revenue in China… [yet] still, despite the gains, Tesla’s Chinese business remains far behind the money it makes in the US.” Taking a look at the chart below, it’s clear why “making moves in China is significant for Tesla’s future success. Not only has China sold more electric cars than Europe or the US over the past couple of years, it’s also grown at a much faster rate.”

Tesla

Plug-in electric car sales in China, Europe, and the US (Business Insider via Statista)

Furthermore, China is “the world’s most populous country, and with tighter emission standards making it a friendlier place for cleaner cars like Tesla’s, China may have more room for future growth.” And according to Investor’s Business Daily, the recent “$1.8 billion purchase of stock in Tesla by Tencent Holdings helps both companies fill a hole in their business strategy in China, says an analysis by Edison Investment Research. Richard Windsor, Edison analyst, said Tencent’s investment should bring Tesla ‘badly needed capital as well as serving as a way to open doors in China.'”

Above: Tencent buys 5% of Tesla (Youtube: Cheddar)

“This fits nicely with Tesla’s ambitions in China,” Windsor wrote as Tencent “is the dominant ecosystem in China,” with more than 850 million monthly active users. “Tesla gets a strong partner to help it fix the problems that it has had in terms of penetrating the Chinese market, while Tencent gets a potential route into both the automobile and autonomous-driving (markets) with a major global player,” Windsor explains. That said, China could become a key part of Tesla’s growth story in the coming years.

*Editor’s Note: EVANNEX, which also sells aftermarket gear for Teslas, has kindly allowed us to share some of its content with our readers. Our thanks go out to EVANNEX, Check out the site here.

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8 Comments on "China Likely To Yet Become Tesla’s Largest Market"

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Taylor S Marks

I don’t think people really wonder about if so much as when.

China is already their second largest market, and the fastest growing. If the current rates continue, with the US continuing to double and China continuing to triple, then China will be slightly smaller than US in 2019, and slightly larger than US in 2020.

Of course, I kind of doubt growth rates in either, let alone both, countries will so steadily hold their rates.

turboro

With 19 million sold cars it is already the biggest car market by far. I am now in Shanghai and it seems everybody has exchanged his S-Class for a Model S or X although price are $150’000+ due to import tax. Also 99% of all scooters are electric, EV-CARd to go, Charging points at many locations and hotels, they go fast and when Tesla will produce local also Model 4, they can completely dominate the market faster than we think.

Roy_H

Almost every auto manufacturer is looking at China as their largest market.

Roy_H

“Of course, I kind of doubt growth rates in either, let alone both, countries will so steadily hold their rates.”

With the Model 3 this is almost a certainty. EVs in general are just at the beginning of the S-curve at a mere 1% to 2% of market. Eventually they will take over, just a question of when. 5 to 10 years?

mx

In the US stocks are owned by 80 year olds, like the Koch’s. Old people stop learning. Money is heavily weighted to the aged.

od

In Beijing I see Tesla in every street in my area, they must be selling a lot in china now and taking away a lot of luxury sales from German brands.

turboro

I agree, i am now in Shanghai after 3 years and see here the same effect, see my comment above, a positive shock, chinese move fast or with big steps when they have something set in their minds

Pushmi-Pullyu

China is “the world’s most populous country, and with tighter emission standards making it a friendlier place for cleaner cars like Tesla’s, China may have more room for future growth.”

Gosh, reading that, one would never know that China’s government is very hostile to foreign auto makers, forcing them into being a minor (<50%) partner with domestic Chinese companies if they want to manufacture automobiles in China, and imposing ruinously high tariffs on those who don't.

You also wouldn't know that China's government has a habit of suddenly announcing restrictions on any company that is out-competing its domestic companies, such as recently happened with LG Chem's battery manufacturing in China.

While China is a huge potential market for China, it seems very unwise of Tesla to make any significant investment in manufacturing there, because that could all be wiped out in a day if the Chinese government decides to change the regulations yet again to even more strongly favor domestic Chinese manufacturing.

http://www.businesskorea.co.kr/english/news/industry/16570-regulations-battery-chinese-government-virtually-blocking-korean-batteries