Tesla Motors Inc (NASDAQ:TSLA)’s CEO Elon Musk made a surprising revelation, where he said that Tesla could start manufacturing electronic vehicles in China within the next three years, according to a report from Cleantechnica. Musk informed in an interview to Xinhua, a state-run news agency, that the company needs only three-years’ time to start with the manufacturing of electric cars in China.
Localizing production could help earn incentive
The comments from the CEO may seem a bit surprising as, presently, the company is struggling with sales in the region. The sales made by Tesla in China are low, which has led to a disappointment for the CEO. This has not deterred him though from making efforts to tap the potential Chinese market.
If Tesla Motors Inc (NASDAQ:TSLA) chooses to localize production in China, it will benefit from the incentives of significant nature provided by the government. “We have a strong long-term commitment to China, and we intend to establish both local production and local engineering in China,” Musk noted.
The CEO holds scalpers responsible for the sales troubles faced by the company in China. He said that that he was under an impression that there is a huge demand for Model S in China, but in reality it was not as much as he thought. This gap in expectations and reality was because of the high orders placed by the scalpers, who tried hoarding the vehicles, and then sell it for even higher price. Below expected demand led to excessive inventories of already built-in cars in China because of high-number of canceled orders.
Tesla strives to position itself in China
Tesla Motors Inc (NASDAQ:TSLA) CEO still has high expectations attached with the sales of electric cars in China. Previously, he informed that the company has plans of establishing localized production centers in China and Europe. However, the company would first need to instill confidence among the Chinese customers for the brand.
Chinese are not very enthusiastic about products and services from outside the nation, but since Tesla Motor (NASDAQ:TSLA) is targeting the wealthy with its electric cars, therefore, the exact fate of the company in China cannot be predicted since the acceptance for products depicting status is very high among the Chinese especially when it comes to cars.