Tesla boss Elon Musk 'misled' by local speculators but won't give up China market
Elon Musk, prominent US tech industry leader, has learned a hard lesson from market speculators in China, though the founder of electric car maker Tesla said he wouldn't give up after recent sales problems in the world's largest economy.
Tesla had been "misled" by Chinese speculators into believing that demand for their vehicles was "extremely high", leading to an excess of inventory, Musk said during a visit to China, where he attended the Boao Forum in Hainan province.
Many orders were not placed by genuine buyers, but resellers who cancelled when the cars arrived, the official news agency Xinhua reported, quoting Musk.
"China is the only place on earth where we have excess inventory. We are essentially selling cars that speculators ordered but we were unable to deliver," he said.
Equity research firm JL Warren Capital said 260 units of the Tesla Model S were licensed in February, a 45 per cent decline over the month before.
It was estimated that around 1,600 Tesla vehicles were imported to China but not properly licensed due to speculators' whipped-up demand.
Despite the initial setbacks, Musk said the company has seen a steady increase in sales in CHina over the past three months and he is "quite optimistic about where things are headed".
"We have a strong long-term commitment to China, and we tend to establish both local production and local engineering in China," he said.
The California-based car maker began taking orders in China in mid-2013 for its Model S sedan and started delivering the first cars to Chinese consumers last April.
Tesla is increasing its charger network, and giving Chinese customers mobile adaptors that would allow them to charge anywhere to address concerns about coverage, the Xinhua report said.
The company is also trying to improve its built-in maps and navigation system, with a software upgrade coming out this week. It will also integrate traffic-based routing in the next few months, the report said.
"It is clear that we need to think of China in a very long-term way. We need to steadily boost the confidence of the Chinese consumers," Musk said.
During a panel discussion on Sunday at the Boao Forum, Musk revealed his ambition to expand into driverless cars, which Google has been testing for the past year and Chinese carmakers and tech firms have also expressed an interest in.
"If the technology is mature, we may see mass production of driverless cars [within five years]," he said.