Business / Auto China

Tesla faces bumpy ride in China

(Xinhua) Updated: 2014-02-24 09:35

The company's marketing strategy might work in the US, but is misfiring in the Chinese market.

Unlike Tesla, China's leading carmakers have put electric coaches, taxis and inexpensive private sedans as their main new-energy products, the government's priority in the new energy era.

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"Actually, no automakers in China consider electric sedans for individual customers a major development strategy, not to mention luxury cars for high-end buyers," said Zhong Shi, another auto industry analyst.

Chinese government has supported the new energy vehicles with subsidies to carmakers and making it easy for buyers to register them. This has mainly benefited the electrification of public transportation like taxis and buses. Promotion is easier in those government-led fields.

By the end of 2015, China plans around 300,000 new energy vehicles in 40 cities, over ten times last year's sales. Analysts expect the increase to mainly be in electric buses and taxis, not luxury sedans.

In response, Tesla is reportedly thinking about opening plants in China and launching models at a range of different prices, to win both the hearts of Chinese car buyers and the preferential policies of the Chinese government. In that case, Tesla will feel the pressure of fierce competition and local protectionism, inevitable during the localizing process.

Tesla's leaders still have faith in their Chinese future and expect it to contribute greatly to their global revenue.

Tesla's 2013 revenue increased nearly five times to $2 billion on a GAAP basis, with an overall loss of $74 million, way better than expected.