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Tesla International Expansion into Korea

Discussion in 'TSLA Investor Discussions' started by bh1783, Jul 7, 2015.

  1. bh1783

    bh1783 Member

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    #1 bh1783, Jul 7, 2015
    Last edited: Jul 7, 2015
    Looks like Tesla is going to be expanding into Korea pretty soon (based on their job postings)

    https://chc.tbe.taleo.net/chc01/ats/careers/requisition.jsp?org=TESLA&cws=1&rid=29548

    Korea has the potential to be one of Tesla's biggest markets. It's already the 5th largest market in the world for the Mercedes E Class and S Class
    http://www.koreatimes.co.kr/www/news/biz/2014/10/123_147201.html

    Also, it's in the top 5 markets for the Audi A8, Jaguar, and BMW 7 series. I think it's one of the top markets in the world for Maserati as well. BMW already sold over 100 i8's and the Bentley dealership in Seoul is the 2nd busiest in the world(after Dubai)

    http://www.reuters.com/article/2015/03/09/southkorea-autos-luxury-idUSL4N0W510N20150309

    Tesla should easily be able to move a couple thousand units per year in Korea alone.
    Korea has:
    $10/gallon gas
    $10,000-$15,000 EV incentives for cars
    100% fully deductible leases against income (that's why its one of the largest luxury car markets in the world)
    small country so no range anxiety (50 million people, more than the entire US west coast in an area the size of Ohio)
    large domestic battery producers Samsung SDI and LG Chem

    I think fewer than 10 superchargers would cover the entire country since you can only drive in one direction (South!)
     
  2. adiggs

    adiggs Active Member

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    Dear lord @bh1783 - with the market characteristics you're describing, I agree with your assessment - Korea is going to be huge for Tesla. Sounds almost like another Norway :)

    Do the other luxury makers mark up their cars in Korea significantly relative to pricing in the US or other markets? My understanding is that a Mercedes in China is on the order of 2x as expense as the US. I ask because if there is a similar dynamic in Korea, then that becomes another factor in why Tesla is going to be selling a lot of cars there - they price consistently around the world, and that's going to make a Model S cheap.
     
  3. bh1783

    bh1783 Member

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    Yeah for larger displacement vehicles it's about a 1.5x markup.
    For example, a Hyundai Equus that sells for $68k in the US sells for $110k in Korea.
    In the US, a Mercedes S600 sells for 166k while in Korea the same model is around 266k. So yeah about a 70-75% markup for vehicles that the Model S would compete against. Mercedes does sell an S350 though for 128k in Korea.
    A single Tesla dealership in Seoul would probably move at least a 1000 units per year. The single Maserati dealership in Seoul sold 730 Ghibli's this past year.
     
  4. ItsNotAboutTheMoney

    ItsNotAboutTheMoney Active Member

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    Just don't mention the Panasonic cells.
     
  5. jhm

    jhm Active Member

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    #5 jhm, Jul 8, 2015
    Last edited: Jul 8, 2015
    Good point. IIRC, Tesla approved LG Chem as a supplier. Perhaps they could work out using LG Chem cells in vehicles destined for Korea. I wonder if that would have any tax or other regulatory advantage.

    Psy_money.jpg
     
  6. bh1783

    bh1783 Member

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    I think Samsung SDI is approved as well. I don't think there would be any tax or regulatory advantage. Korea already has a FTA agreement with the US, and Europe.

    I think the main hold up in Korea is the dealership angle. Most imported cars are run through importers/dealer franchises in Korea. I believe it took Porsche almost ten years to open up a company store in Seoul. Using a dealer franchise in Korea would probably weaken Tesla's efforts to avoid dealerships in the states.
     
  7. jhm

    jhm Active Member

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    Ah, I think I confused Samsung SDI with LG Chem. Thanks.
     
  8. svp

    svp Member

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    Interesting. I was wondering for a while, why Tesla has not rolled out in Korea faster. One other obvious element, which makes this market attractive is geography - the population is very dense, you only really need a few superchargers to cover the country, and people only really drive within the country. So range is not a concern.
    One major concern, I guess, will be home charging in urban areas. Do people normally have dedicated parking spots?

    Other markets with similar characteristics in terms of geography are Israel and Taiwan.
     
  9. Ingenieur

    Ingenieur Member

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    In order to get incentives you have either be Korean Carmaker (GM is Daewoo), except for BMW who got qualified for subsidies thanks to its big R&D Base in Korea and the fact that large part of the car value comes from Korea (Battery), also BMW is most popular foreign Brand in Korea (maybe tied up with VW now though). BMW invests tons of money in Korea too, for example building a Massive 64 mio $ Dealership with indoor test track.
    Also having a guy Direct Korea from Japan is very stupid idea for historical reasons imo
     
  10. bh1783

    bh1783 Member

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    #10 bh1783, Jul 9, 2015
    Last edited: Jul 9, 2015
    It's impossible to drive outside of the country with the DMZ and North Korea on the border. Israel is also a really good candidate since politically, no one is ever driving outside of the country's borders. It makes sense in these countries where you can realistically only drive 2-3 hours at a stretch to have electric cars.

    A vast majority of people live in apartment complexes with underground parking. Urban charging isn't an issue since almost no one parks their cars on the streets. All shopping malls, apartments, and office buildings utilize underground parking. BMW provides free charger installs for people that buy an i3.
    Electric cars make sense in Korea since the majority of cars are parked indoors at all times.
    IMG_0006.jpg
     
  11. bh1783

    bh1783 Member

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    Looks like the mainstream media picked up this posting:
    Is Korea the next big market for Tesla? - Fortune
    Tesla's next big frontier could be South Korea - Business Insider


    Update from a Korean newspaper:
    Tesla eyes Korea in Asia push
    Korea can be Tesla's 4th or 5th largest market. BMW sold 185 i8's @$185k each and recently ordered another 50. Despite it's size, Korea is the 5th or 6th largest luxury car market in the world (after the US, China, Germany, UK and maybe Japan). According to industry data, sales of luxury cars priced at 100 to 150 million won were 9,360 vehicles last year, while the figure for those priced over 150 million won was 5,616 vehicles, almost double of a year ago. The Korean luxury car market is the same size as Japan despite having 1/3 the population.

    With EV incentives (10-15k per vehicle) I would estimate that Tesla could sell over 5,000 model S and an equivalent number of Model X's (Cayenne and Range Rovers are super popular in Korea). 10k units per year would make Korea one of Tesla's largest markets. BMW and Mercedes both move over 20k units per year in Korea.
     
  12. DrGuest

    DrGuest Member

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  13. bh1783

    bh1783 Member

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    Korea has the potential to be Tesla's 4th or 5th largest market.
     
  14. bh1783

    bh1783 Member

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  15. hobbes

    hobbes Active Member

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  16. JRP3

    JRP3 Hyperactive Member

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    Indeed. I wish Tesla had gone into Korea before China.
     
  17. bh1783

    bh1783 Member

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    Agreed, opening stores in places like Xian before Seoul was a major mistake. Seoul is the #2 market in the world for cars over 100k.
     
  18. JRP3

    JRP3 Hyperactive Member

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    Plus the limited geography means greater sales density and easier supercharger coverage. Either Tesla knows something we don't or it was a fairly rare strategic blunder on their part.
     
  19. Gerasimental

    Gerasimental Member

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    IIRC Korea had,until recently, quite an unfavourable legislative and regulatory environment. The one example that comes to mind is the ban on electric vehicles on highways, which stemmed from the assumption that all purely electric vehicles were golfcart-style mini vehicles that were not safe at highway speeds. Maybe Tesla were just waiting for some of those kinks to get worked out?
     
  20. renim

    renim Member

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    thats even more reason to go to Korea.

    yes, its was correct to go to China first, but Tesla chose many places that were not suitable. Didn't the story about the millionaire who planted 20 charging stations to get his car from Beijing to Guangdong E-Car Owner Builds Recharging Network from North China to South not seem clear enough to describe where the demand was, and where the demand was not.

    Koreans drive significantly larger car than the Japanese, just compare sales rates for Sonata class cars in Korea vs Camry class cars in Japan.

    Korea also has the advantage of cheap and easy to expand, 220V AC charging, all thats required is a RFID sticker to turn a power point into a charging point. EV-LINE Àü±âÂ÷ ÃæÀü ¼­ºñ½º

    small country
    ease to obtain 220V AC charging, especially for apartment residents (and Seoul is basically a spread-out apartment city, so North Korean guns find it more difficult to concentrate fire)
    decent Chademo network (perhaps around 350 units)
    only 1 SC station to go from Seoul to Busan, only a handful of stations needed to saturate the country
    significant cultural tendency to benchmark vs China and Japan
     

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