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Entrepreneur Elon Musk has launched spacecraft into orbit, but popularising his Tesla electric cars on the mainland appears to be tougher than rocket science.
PayPal billionaire Musk - co-founder and chief executive officer of Tesla as well as chief of rocket maker SpaceX - visited China last month, and admitted sales were below expectations.
"China is the only place on earth that we have excess inventory," Musk said, blaming "speculators" for ordering cars amid the early media hype and then not taking delivery.
When the mainland's premier auto show opens today in Shanghai, Tesla will be among 2,000 exhibitors vying for the eyes - and wallets - of the Chinese market.
Analysts say electric vehicles face challenges: consumer reluctance due to perceived problems with safety, reliability and access to charging facilities.
Tesla has never announced sales targets for China, but the launch of its cars generated widespread media coverage.
Now, though, it has more than 2,000 unsold vehicles, according to mainland media reports, and confirmed last month that it was cutting jobs in the country.
"Elon Musk and his team had a very limited understanding of the China market," said Professor Gong Yan of the China Europe International Business School. "The fanatical reaction at the time caused a misjudgment of the China market by his team."
To help sales, Tesla is giving every buyer a free charger and free access to its mainland network of more than 50 "supercharging" facilities - the equivalent of a petrol station, although they take an hour to do the job.
Beijing is keen to promote the use of "new energy" vehicles, out of concerns over pollution and as part of a broader policy to build up the domestic car industry.
State-backed power companies are building charging stations around the country, but even Neo Wang, the founder of mainland charging network builder ChargerLink, admits it is an issue.
Formerly an Intel executive, he bought his first Tesla because "in the eyes of people in my industry, technology is fashion", but liked his car so much he joined forces with the maker.
When he drove it the thousands of kilometres from Beijing to Shenzhen, he said refuelling every 350km was a "headache" and he had to turn to hotels along the way to help.
"The biggest concern about an electric car for most people is charging and the distance it can go," he said. "Electric cars cannot develop if the charging service is insufficient."
Ahead of its launch, Tesla stressed that the base price for its cars would be the same around the world, with differences only due to shipping costs and tax.
Even so the Model S costs from 685,000 yuan (HK$868,000) to 953,000 yuan on the mainland, significantly more than in the United States.
While the mainland government offers subsidies to electric car buyers, they do not apply to imported vehicles such as Teslas.
Musk alluded to the issue when visiting last month, saying Tesla planned to localise production in the country in three years.
Stricter emission and fuel consumption standards, along with free plates in some areas that limit conventional cars - including Shanghai, where vehicle licences can fetch as much as 75,000 yuan at auction - have potential to support electric vehicle sales.
But the market remains small for now. Electric and hybrid vehicle sales in the country reached 26,581 in the first quarter of this year, three times the same period in 2014 but still accounting for less than one per cent of sales, according to the China Association of Automobile Manufacturers.
"There is always a niche in the market for certain products," said Namrita Chow, London-based principal analyst for IHS Automotive, but added that Tesla's high-end vehicles faced competition from BMW, which offers the electric BMW i3 and hybrid BMW i8. Hybrids combine an electric engine with a conventional combustion one.


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Tesla

Tesla electric cars struggle to ignite Chinese market

Tesla has never announced sales targets for China. Photo: AFP

News

China

Money & Wealth

It doesn't seem like rocket science but billionaire Elon Musk is wondering how to shift a backlog of the vehicles on the mainland


Entrepreneur Elon Musk has launched spacecraft into orbit, but popularising his Tesla electric cars on the mainland appears to be tougher than rocket science.
